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Dow Plunges After Kudlow Says US, China Deal Far Away

Dow Plunges After Kudlow Says US, China Deal Far Away

Thursday, 07 February 2019 05:10 PM

Wall Street stocks sank on Thursday as worries that the United States and China would not be able to reach a trade deal increased concerns about slowing global economic growth.

U.S. President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before the March 1 deadline set by the two countries for reaching an agreement.

Earlier, the Dow had tumbled nearly 400 points after White House adviser Larry Kudlow said there was a pretty sizable distance to go in the trade talks. The next round of discussions will take place in Beijing in the coming week.

Kudlow's comments, made in an interview to Fox Business Network, added to worries over a global slowdown which was rekindled after the European Union cut its economic growth forecasts. 

U.S. stocks then extended losses after a CNBC report said a meeting between President Donald Trump and Chinese President Xi Jinping was “highly unlikely” to take place by a key March deadline, set by the two countries for reaching a trade deal.

U.S. stocks had already been under pressure after the European Commission slashed its euro zone growth forecasts for 2019 and 2020 due to an expected slowdown in the largest countries of the bloc, partly due to trade tensions.

“There’s a resurfacing of global growth fears, which has pushed U.S. stocks down,” said Veronica Willis, investment strategy analyst at Wells Fargo Investment Institute in St. Louis. “There are still some concerns surrounding trade, and I think those issues will linger for some time.”

Stocks pared losses toward the end of the session. The benchmark S&P 500 index hit a key technical level - 2,700 - that likely prompted buying, said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.

Still, among the S&P 500’s major sectors, only the defensive utilities and real estate indexes were positive, illustrating Thursday’s risk-off sentiment.

The Philadelphia SE Semiconductor Index tumbled 2.2 percent. Chipmakers get a large chunk of their revenue from Chinese customers.

Disappointing financial forecasts from several U.S. companies, including Twitter Inc, have also given investors pause.

More than half of S&P 500 companies have reported fourth-quarter results, with about 71 percent beating profit estimates, according to IBES data from Refinitiv. However, current-quarter earnings growth estimates have shrunk to 0.1 percent from 5.3 percent at the start of the year.

“As earnings reports come in, there’s a heightened concern that future revenue growth as well as earnings over the course of 2019 won’t be as robust as investors expected,” said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

The Dow Jones Industrial Average fell 220.77 points, or 0.87 percent, to 25,169.53, the S&P 500 lost 25.56 points, or 0.94 percent, to 2,706.05 and the Nasdaq Composite dropped 86.93 points, or 1.18 percent, to 7,288.35.

Energy stocks fell 2.1 percent, the largest percentage drop among S&P 500 sectors, as crude prices sank on worries of tapering demand because of trade tensions.

Twitter shares tumbled 9.8 percent after the social media company forecast that revenue in the first quarter would be weaker than expected and that its full-year operating costs would rise.

SunTrust Banks Inc shares jumped 10.2 percent after the bank agreed to be bought for about $28 billion in stock by fellow regional lender BB&T Corp, whose shares rose 4.0 percent.

Declining issues outnumbered advancing ones on the NYSE by a 2.34-to-1 ratio; on Nasdaq, a 2.08-to-1 ratio favored decliners.

The S&P 500 posted 16 new 52-week highs and two new lows; the Nasdaq Composite recorded 32 new highs and 34 new lows.

Volume on U.S. exchanges was 7.82 billion shares, compared with the 7.49 billion-share average over the last 20 trading days.

© 2021 Thomson/Reuters. All rights reserved.


   
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U.S. stocks sank over 1 percent to session lows on Thursday on fears that the United States and China would not be able to reach a trade deal with less than a month left in their fragile truce, adding to worries about a slowdown in global growth.
dow, stock, market, kudlow
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2019-10-07
Thursday, 07 February 2019 05:10 PM
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