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Stocks - S&P Slumps as China's Rare-Earth Threat Buries Shares

Published 05/29/2019, 03:47 PM
Updated 05/29/2019, 05:01 PM
© Reuters.

© Reuters.

Investing.com - U.S. stocks tumbled Wednesday as the U.S.-China trade war intensified after Beijing signaled it was ready to retaliate against Washington by halting exports of rare-earth metals.

The S&P 500 slumped 0.69%. The Nasdaq Composite fell 0.79%, and the Dow plunged 0.87%.

China is "seriously" mulling a ban on exports of rare-earth exports to the U.S. and may also implement other countermeasures, the editor-in-chief of the Global Times, a newspaper associated with China's Communist Party, said in a tweet.

A ban on exports of rare-earth metals, 17 vital commodities used in production across a number of U.S. sectors, including oil refining, electronics and the glass industry, will likely trigger a response from Washington and prolong the trade war between the two nations.

Trade-sensitive stocks like Boeing (NYSE:BA), Caterpillar (NYSE:CAT) and 3M (NYSE:MMM) reflected the jitters on trade, closing lower on the day. Boeing, off 1.7%, trimmed 41 points from the Dow.

Energy stocks, meanwhile, added to losses from a day earlier as oil prices settled modestly lower. Investors weighed the impact on prices of a prolonged trade war against ongoing tensions in the Middle East and OPEC output cuts.

With the prospect of tit-for-tat tariffs between Beijing and Washington on the horizon once again, U.S. government bond yields extended their losses, exacerbating a key inversion - shorter-term rates rising above longer-term rates - in the curve, stoking fears of a recession.

The inverse spread between the 3-Month and 10-Year Treasury yields, the most important part of the yield curve, is at its widest since the financial crisis.

If there was any good news out of the day's declines it was that, at the close, the indexes had reclaimed nearly half of their losses at their worst levels. Still, the indexes' declines were their fourth in five days. The Dow is off 6.2% so far in May with the S&P 500 down 5.5% and the Nasdaq down 6.8%.

The FAANG stocks (Facebook (NASDAQ:FB), Amazon.com (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix and Google) also swung out of favor, with Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL) leading the decline, dragging broader tech deeper into the red, as investors reined in their bullish bets on growth stocks.

Consumer discretionaries were also under pressure amid a decline in retailers, led by 31% slump in Canada Goose Holdings (NYSE:GOOS) after the outdoor apparel company delivered mixed earnings and downbeat guidance.

In other company news, Cypress Semiconductor (NASDAQ:CY) surged 12% on a Bloomberg report that the chipmaker will explore a potential sale after attracting suitors.

The political front also soured sentiment on risk assets after Special Counsel Robert Mueller, summarizing the findings of the report into Russian interference into the 2016 U.S. election, said that "if we had had confidence that the president clearly did not commit a crime, we would have said so." That prompted calls from Democrats to impeach President Donald Trump.

Top S&P 500 Gainers and Losers Today:

Helmerich and Payne (NYSE:HP), CenturyLink (NYSE:CTL) and Deere & Company (NYSE:DE) were among the top S&P 500 gainers for the session.

Capri Holdings (NYSE:CPRI), L Brands (NYSE:LB) and PVH (NYSE:PVH) were among the worst S&P 500 performers of the session.

Latest comments

Brazil have, I don't know why, vast unexplored reserves of rare earths! That is a very good time to begin the exploration!
Brazil have, I don't know why, vast unexplored reserves of rare earths!
Where is Navarro? I would like to hear if this outcome was in his estimates. SURPRISE!
hi
china is finally getting called out for decades of poor sportsmanship on trade and are throwing a tantrum like a child. western media and the transience of democratic government weakens our position terribly. might be time to reevaluate our commitment to these values if they compromise our ability to compete.
If China loses another 4 million jobs because of the trade war, then the Communist Party will appoint another figure head to do their bidding and no one will ever here or see Xi and his family ever again.
China must learn some lessons from US
I think they're already learning by retaliating and playing hard ball.
Our previous trade deal was no tariffs on China and China places tariffs on anything they want from the US. Seems fair.
Haha, Didn’t they also try to block the VPN as well so their citizens are blind to all outside world
All social from western r fake. Chinese no need to consume fake news
  they're banned on paper, but apparently it's not difficult to get around it.
Progress always has pains along the way. If you're unwilling to fight for fair trade, you'll always be the doormat for the world. Anyone who says our previous trade deal with China was fair, they're either ignorant of what the actual trade deal was or they're a liar.
What was the actual unfair trade, previously? Do tell!
Wall Street sold Main Street
Tariffs on cars, steel, many agricultural products, etc.
It will be interesting to see how many true friends that China will line up for this trade war
actually we use the word allies,u are so adorable
In Chinese term, allies come with a price tag unfortunately
 every allied country has a price tag... monetary or non-monetary.
um. we dont need cheap junk from china either kid
Yes you do. You ain't ballin'.
maybe that's true, by the way, we dont need your junk too, we do have sent your e-waste back to your lovely sheds
Yes, China produces a lot of junk, but they also produce a lot of components for high-priced products like Apple, flat-screen TV's, generators, etc. You get what you ask / pay for. That's why it's known as the world's "factory".
Trump is too desparate now. He thought by blcoking Huawei implementing those tariff on China will favor his side. Now US gonna suffer more. China dont even need USA to survive. They are the biggest consumers and the biggest labour in the world. Pity USA.
You don't need made from China? Look in your house, 99% of things gave made in China mark. You will be homeless without China.
They are becoming more and more from Vietnam, Thailand, Malaysia, Morocco now as a matter of fact and counting....
Without US china cant do nothing, us is money bank, and china Labour bank.
Let's hurt each other.
Looks like you've been studying the rules of the game.
looks like US will be the one suffer more, hhha, we'll see
Doesn't matter mr president keep going and don't stop until you win, after all I trust in your superb negotiation' skills and extraordinary economic insight...
i will have to admit you are as eloquent as Shakespeare, hha, one day you Americans will find your right place to fit in the world, no more giant babies crying for milk, coz no one is gonna feed you
can't tell whether you are being sincere or not because of your username and exaggerated reverence for your president... :/
I think he was being sarcastic. My decision to respond as though he was sincere, was a bit sarcastic as well.
What a bunch of cry babies, Trump 2020
Jailled!
China has been buying up rare earth mineral rights around the world for years. The US not so much
Yes, its called investing. However, China does not hold all of the rights to rare earth mineral mining. There are other sources for what is needed. As always, changes in previous patterns of fulfillment denote temporary setbacks and losses in the short term. But, if the childish *****for Tat reactions are prolonged, China has much to lose. Imagine the trillions that have been invested in the mining rights over the past few decades. Then, imagine new sources and alternate means of fulfilling manufacturing needs for those minerals. The long term impact on returns from Chinese investments could be the loss of key export contracts with US manufacturers and their subsidiaries. These export contracts may not be easily regained, if the new suppliers establish long-term business relations with the US. It might even require additional price reductions, which could spur unwanted supply competition. No matter how you slice it, it comes up "Less Profitable" in the months ahead.
Damn.... Trump taking so many Ls this year.... I love this year!
Oooooops..... Trump didn't know China has rare earth.
Rare earth is not unique to China, just youn know
 It's not, but 70% of US supply is quite a bit LOL.
 yeah it's not, but from what I've read, US doesn't have the facility / enough facility to process them. That's why they decided to import. They're aware of this issue, but they choose to concentrate on other matters.
things are getting interesting. now it's trumps turn to halt exports of rare earth elements
3:D 3:D .YRREB
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