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S&P and Dow Slide as Evidence of Global Slowdown Mounts S&P and Dow Slide as Evidence of Global Slowdown Mounts
(about 1 hour later)
Stocks slid on Wednesday, a second day of declines that has ended a relatively calm stretch of trading on Wall Street, as investors faced new evidence that global growth is threatened by the trade war. Stocks slid on Wednesday, a second day of selling that has shattered a relatively calm period for Wall Street, as investors faced new evidence that global growth is threatened by the trade war.
Just after 12 p.m. on Wall Street, the S&P 500 was down nearly 2 percent and on track for its worst day since late August. The S&P 500 was down about 2 percent and on track for its worst day since late August.
The selling this week began after a key measure of manufacturing activity showed that factory output in the United States had slowed to levels last seen at the end of the financial crisis a decade ago. The selling this week began after a key measure of manufacturing activity showed that factory output in the United States had slowed to levels last seen at the end of the financial crisis a decade ago. The data was the latest indication that the conflict between Washington and Beijing is chipping away at the industrial base in the United States, after having already dented Japan and Germany.
Industrial companies and materials stocks — a category that includes chemical companies and fertilizer manufacturers — suffered the steepest drops by midday Wednesday. Airlines suffered particularly steep drops after Delta provided an updated forecast on the third-quarter earnings that disappointed the market. Delta was down roughly 6 percent. Although both the United States and China had taken measures to calm trade-war tensions, including delaying some expected tariffs, investors are worried that little progress has been made toward a long-term resolution of the conflict. Representatives from the two countries are expected to restart talks later this month.
The two-day decline has ended a quiet period for investors in the United States. The S&P 500 had not fallen 1 percent or more on any single day in September as investors awaited the next round of trade talks between the United States and China. Those are expected to happen later this month. “This is the markets unequivocally insisting that there be verifiable, material progress in next week’s trade talks between the U.S. and China,” said Julian Emanuel, chief equity and derivatives strategist at brokerage firm BTIG.
That calm was shattered on Tuesday, after the Institute for Supply Management reported that its manufacturing index fell in September to its lowest level since June 2009. It was the second month of contraction for factory activity in the United States. Industrial companies and materials stocks — a category that includes chemical companies and fertilizer manufacturers — suffered the steepest drops by midday Wednesday. Airlines also fell sharply after Delta provided an updated forecast on third-quarter earnings that disappointed the market.
Weak auto-sales reports also contributed to the market’s dour mood. Ford and GM were both down almost 4 percent.
Large technology companies were also hard hit, with Apple and Microsoft, two of the biggest companies in the S&P 500 by market value, down more than 2 percent. Big tech producers have been particularly sensitive to developments in the standoff between the United States and China.
The two-day decline has ended a quiet stretch for investors in the United States. The S&P 500 had not fallen 1 percent or more on any single day in September.
Selling began on Tuesday, after the Institute for Supply Management reported that its manufacturing index fell in September to its lowest level since June 2009. It was the second month of contraction for factory activity in the United States.
Also on Tuesday, the World Trade Organization cut its forecast for growth in trade. World trade in merchandise is expected to expand just 1.2 percent this year, in the weakest year since the heat of the financial crisis in 2009.Also on Tuesday, the World Trade Organization cut its forecast for growth in trade. World trade in merchandise is expected to expand just 1.2 percent this year, in the weakest year since the heat of the financial crisis in 2009.
And on Wednesday, a private report on hiring in the United States was slightly slower than economists had forecast. The report, released by ADP, is a precursor to the monthly jobs report from the Labor Department, though it is not necessarily indicative of what the official data will show. President Trump, who has a close eye on the stock market and has in the past touted its gains as a report card on his presidency, blamed the decline on an impeachment inquiry by Democrats. “All of this impeachment nonsense, which is going nowhere, is driving the Stock Market, and your 401K’s, down,” he wrote on twitter on Wednesday.
The selling was sharper in Europe, where London’s FTSE 100 had dropped more than 3 percent by Wednesday afternoon. In Asia, stocks had weakened slightly, but not to the same extent experienced in Europe. Hong Kong’s Hang Seng Index closed down 0.19 percent, while the Nikkei 225 finished 0.49 percent lower. But concerns about the economic outlook were apparent in other financial markets also. Yields on government bonds and crude oil prices, both of which are reactive to economic concerns, also fell.
For investors, a number of opportunities to gauge the state of the economy lie ahead. On Friday, the Labor Department will report on the monthly pace of hiring in the United States in its highly watched jobs report. Ahead of that report, a private report on hiring, released by ADP, was slightly weaker than economists had forecast.
Companies will also soon begin to update investors on their businesses in quarterly earnings reports.
The selling on Wednesday was sharper in Europe, where London’s FTSE 100 dropped more than 3 percent. In Asia, stocks had weakened slightly, but not to the same extent experienced in Europe. Hong Kong’s Hang Seng Index closed down 0.19 percent, while the Nikkei 225 finished 0.49 percent lower.
In Europe, Germany has become a point of concern, with its factory orders dropping as Chinese companies, hit by tariffs on exports to the United States, purchase less German machinery.In Europe, Germany has become a point of concern, with its factory orders dropping as Chinese companies, hit by tariffs on exports to the United States, purchase less German machinery.
At the same time, Britain remains enmeshed in negotiations over Brexit and faces huge uncertainty over its future trading relationship with Europe. Prime Minister Boris Johnson is set to unveil a new proposal on Wednesday for the terms of leaving the European Union at a Conservative Party conference, but there is still a risk that Britain will leave the bloc at the end of the month without a deal.At the same time, Britain remains enmeshed in negotiations over Brexit and faces huge uncertainty over its future trading relationship with Europe. Prime Minister Boris Johnson is set to unveil a new proposal on Wednesday for the terms of leaving the European Union at a Conservative Party conference, but there is still a risk that Britain will leave the bloc at the end of the month without a deal.