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Indexes briefly cut losses in choppy trade after Powell comments

Published 10/08/2019, 03:23 PM
Updated 10/08/2019, 03:23 PM
Indexes briefly cut losses in choppy trade after Powell comments

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks briefly cut losses in choppy trading on Tuesday after Federal Reserve Chairman Jerome Powell suggested openness to further rate cuts and said the time has come to allow the Fed's asset holdings to begin to expand again.

Powell also said the Fed would "soon announce measures to add to the supply of reserves over time."

However, indexes soon reversed course to fall further in late trading after the U.S. State Department said it is imposing visa restrictions on Chinese officials for treatment of Muslims in Xinjiang.

The interest-rate sensitive financials index (SPSY) was down more than 1%.

Market expectations have increased that the Fed will cut interest rates by a quarter percentage point in October, according to CME Group's FedWatch tool.

Those bets were bolstered on Tuesday by data that showed U.S. producer prices unexpectedly fell in September.

"The overall tone from the Fed is showing a little more concern," said Willie Delwiche, investment strategist at Baird in Milwaukee.

"The Fed is trying to send a message of 'we are paying attention and we are on top of this, and we are going to focus on the mission and not the politics,'" he added.

At 3:17 p.m. ET, the Dow Jones Industrial Average (DJI) fell 213.3 points, or 0.81%, to 26,264.72, the S&P 500 (SPX) lost 31.08 points, or 1.06%, to 2,907.71 and the Nasdaq Composite (IXIC) dropped 90.75 points, or 1.14%, to 7,865.55.

A Bloomberg report that Washington was moving ahead with efforts to limit capital flows to China and the inclusion of some top Chinese startups on a blacklist also weighed on stocks.

The trade blacklist was widened to include Chinese video surveillance firm Hikvision (SZ:002415) and surveillance equipment maker Zhejiang Dahua Technology (SZ:002236) among others, drawing a sharp rebuke from Beijing.

The Philadelphia Semiconductor index (SOX) dropped 1.7%.

U.S. and Chinese deputy trade negotiators were to meet in Washington for a second day of talks on Tuesday, with high-level discussions scheduled to start on Thursday.

Declining issues outnumbered advancing ones on the NYSE by a 2.09-to-1 ratio; on Nasdaq, a 2.22-to-1 ratio favored decliners.

The S&P 500 posted 6 new 52-week highs and 20 new lows; the Nasdaq Composite recorded 9 new highs and 138 new lows.

Latest comments

Trump’s administration is far from being transparent and trust worthy as one could wish but no other office in the past would stand up as firm as they are against China’s abusive practices at all levels, from economic stealing to politic dictatorship to non-respect of democratic and human rights to world environmental destruction...
the so called administration is putting the brakes on the economy to force the fed to do a rate cut... just like trump's tweets so his sons can short sell to make money for daddy
The this guy talks about imposing this tax or that tax on any country, he should look at how his actions are harming the country that he is suppose to be looking over.Seems like a little child when he does not get his own way.Every time he says something negative or the white house says something negative then the stocks drop crazy numbers in a day then a week then for the whole month. Stop talking and just sit down and come to an agreement on something before he really does send us back to the Great Depression era.
And this guy says the other countries are paying for the tax not the
  We had been suffering since the summertime with this trade nonsense. Don't think they are paying for anything. I know  stock exchange has been taking big hits so we must be paying for it this way because we have been missing out on big money since the talks of a trade war.We are suffering  because of this trade war. I've seen the market be green for like 4 days straight in one time frame but as soon as he tweets a tax on china that the whole market went down for a whole month .It's crazy..
they need to stop this. no deal will be decided until after the elections
Momma said they'd be days like this.
Fixing Trump
Maybe you should be fixed -
Not before you got fixed first
go fix youself both, Hana, take it easy (´︶`)
Mr market is still neglecting the facts and reacting only on Trumps tweets. When reality kicks in, hold your hats
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