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Wall Street dips, dollar gains on economic, geopolitical concerns

Economy Aug 02, 2022 04:56PM ET
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2/2 © Reuters. A man wearing a protective face mask, amid the coronavirus disease (COVID-19) pandemic, walks past a screen showing Shanghai Composite index, Nikkei index and Dow Jones Industrial Average outside a brokerage in Tokyo, Japan, February 14, 2022. REUTERS/Kim 2/2

By Stephen Culp

NEW YORK (Reuters) - U.S. stocks ended a choppy session lower on Tuesday, while the dollar rallied as risk appetite was dampened by economic uncertainties and escalating U.S.-China tensions.

All three major U.S. stock indexes closed red, with the blue-chip Dow faring worst. Economically sensitive transports underperformed the broader market.

Meanwhile, the safe-haven greenback had a better day than most asset classes, jumping 0.8% against a basket of world currencies.

U.S. House of Representatives Speaker Nancy Pelosi's arrival in Taipei, despite warnings from Beijing, prompted Chinese war planes to buzz the Taiwan Strait in protest.

"There is the uncertainty surrounding Pelosi’s trip to Taiwan and there’s additional data, regarding economic softness," said Sam Stovall, chief investment strategist of CFRA Research in New York. "Regarding recession, it’s not a question of 'if' but 'when and how deep.'"

On the economic front, a report from the Labor Department showed job openings in the United States dropped by 5.4% in June, a sign that the labor market is easing amid softening demand.

That softening demand for workers could translate to cooling wage inflation, and analysts expect Friday's employment report to show hourly earnings growth cooled 0.2 percentage point last month to 4.9%.

Still, comments by Fed officials suggested more interest rate hikes are in the offing.

"What’s happening in the markets is a push-and-pull about where we are economically," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "It’s a matter of whether the Fed continue to raise rates to fight inflation or pivot and stop raising rates as the economy weakens."

The Dow Jones Industrial Average fell 402.23 points, or 1.23%, to 32,396.17, the S&P 500 lost 27.44 points, or 0.67%, to 4,091.19 and the Nasdaq Composite dropped 20.22 points, or 0.16%, to 12,348.76.

Weak economic data and rising Sino-U.S. tensions also pulled European stocks to a lower close.

The pan-European STOXX 600 index lost 0.32% and MSCI's gauge of stocks across the globe shed 0.93%.

Emerging market stocks lost 1.25%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.26% lower, while Japan's Nikkei lost 1.42%.

U.S. Treasury yields edged higher amid volatile trading, hawkish comments from the Fed helped investors look past the brewing geopolitical turmoil over Pelosi's Taiwan visit.

Benchmark 10-year notes last fell 43/32 in price to yield 2.761%, from 2.605% late on Monday.

The 30-year bond last fell about 3/4 in price to yield 3.0268%, from 2.925% late on Monday.

Crude prices advanced ahead of the OPEC+ meeting of oil producers expected this week, who could opt against increasing global crude supply amid signs of waning demand.

U.S. crude rose 0.56% to settle at $94.42 per barrel, while Brent settled at $100.54 per barrel, up 0.51% on the day.

The dollar reversed recent losses against a basket of world currencies.

The dollar index rose 0.79%, with the euro down 0.93% to $1.0166.

The Japanese yen weakened 1.12% versus the greenback at 133.13 per dollar, while sterling was last trading at $1.2166, down 0.67% on the day.

Gold reversed earlier gains to snap its four-day winning streak.

Spot gold dropped 0.6% to $1,761.29 an ounce.

Wall Street dips, dollar gains on economic, geopolitical concerns
 

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Comments (8)
Gerard Rotonda
Gerard Rotonda Aug 02, 2022 5:36PM ET
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It’s Official – The Recession has begun.  GDP fell 0.9% in Q2, and 1.6% in Q1.  Two consecutive quarters of negative economic growth.  Now will the team of eight economists officially pronounce it?  They usually wait until after a recession has begun to officially pronounce it.  Inflation is greater than 4 times the Fed’s 2% target, the 2y10y Treasury yield curve remains inverted, hiring is frozen, borrowing cost higher and investments will slow.  Industrial production also fell in June as well as personal consumption.  Of particular note is that since WWII, every recession has also had a loss in employment; however, unemployment rate has fallen to 3.6% and jobs have been added.  Is this a “Growth Recession” or something larger.
Brad Albright
Brad Albright Aug 02, 2022 5:36PM ET
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Time will tell.
William Smith
William Smith Aug 02, 2022 2:00PM ET
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When China takes over Taiwan and controls 75% of the worlds chips, watch out. They can shut down our electric grid, our water systems, refineries, pipelines. food chains and in fact our entire country. Just a fact, like it or not.
Jeff Chevalier
Jeff Chevalier Aug 02, 2022 2:00PM ET
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Uh, no they can't. You've been watching too much sci-fi.
Bhagwan Dass
Bhagwan Dass Aug 02, 2022 8:25AM ET
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every commodity going up
Søren Kronberg
Søren Kronberg Aug 02, 2022 8:24AM ET
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What a crrock of s….
Dave Jones
Dave Jones Aug 02, 2022 7:26AM ET
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The business of America is war.Taking the planet to the brink of disaster.
Joe Rizzuto
Joe Rizzuto Aug 02, 2022 7:26AM ET
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ignorance is everywhere... um, it is Russia that invaded Ukraine. or is that the u.s. fault.
Joe Rizzuto
Joe Rizzuto Aug 02, 2022 7:26AM ET
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on second thought, Russia invading Ukraine is the fault of the u.s. in as much as an incompetent biden admin has opened the door for war mongering tyrants everywhere
Brad Albright
Brad Albright Aug 02, 2022 7:26AM ET
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It's tough when your dogma and your values collide, isn't it. Pick one.
Jeff Chevalier
Jeff Chevalier Aug 02, 2022 7:26AM ET
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What? Remember trump wanted out of NATO? That was so Putin could invade without the US having to defend the Ukraine. Trump literally gave Putin the green light in the "private meeting".
Joe Rizzuto
Joe Rizzuto Aug 02, 2022 7:26AM ET
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it must be tough to be an adult and not understand sarcasm.
Marco cuevas
Marco cuevas Aug 02, 2022 6:48AM ET
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What Taiwan te sions? All this noise has een created by the media you guys are the only ones spreading this filth to affect the market.
Todd Holaday
JustWilliam Aug 02, 2022 6:44AM ET
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What is the point of this visit? Just to irritate China? The article fails to mention one and ive yet to read one.
Dennis Chuck
Dennis Chuck Aug 02, 2022 3:20AM ET
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Americans are basically stir shet stick. They like to go around the world create conflicts at the expense of others, while benefiting themselves.
Joe Rizzuto
Joe Rizzuto Aug 02, 2022 3:20AM ET
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you sound naive. not that I support media, but russias war machine invading Ukraine is pretty much REAL!!
 
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