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Wall Street tumbles as trade war threatens U.S. economy

Stock MarketsOct 02, 2019 04:54PM ET
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© Reuters. A trader works on the floor of the New York Stock Exchange shortly after the opening bell in New York

By Noel Randewich

(Reuters) - Wall Street's main indexes suffered their sharpest one-day declines in nearly six weeks on Wednesday after employment and manufacturing data suggested that the U.S.-China trade war is taking an increasing toll on the U.S. economy.

Adding to trade concerns, the United States won approval on Wednesday to levy import tariffs on $7.5 billion worth of European goods over illegal EU subsidies handed to Airbus (PA:AIR), threatening to trigger a tit-for-tat transatlantic trade war.

All 11 major S&P sector indexes fell, with energy (SPNY) and financials (SPSY) each down more than 2%.

The ADP (NASDAQ:ADP) National Employment Report showed private payrolls growth in August was not as strong as previously estimated, and said "businesses have turned more cautious in their hiring," with small enterprises becoming "especially hesitant."

That added to fears sparked on Tuesday when a report showed U.S. factory activity contracted to its lowest level in more than a decade.

"The fact the manufacturing side of the economy in the U.S. and globally is doing badly shouldn't come as a newsflash to anybody. But the extent of the miss yesterday is something that's driven this two-day move," said Greg Boutle, head of U.S. equity and derivative strategy at BNP Paribas (PA:BNPP).

The recent weak data has shaken investor faith in the strength of the domestic economy, which had shown relative resilience in the face of slowing global growth. Confidence in the U.S. economy has helped support Wall Street this year.

"If China buys less from us, we have less to manufacture, fewer orders to fill. This data is indicating we are not immune to this trade dispute, that it's hurting us as well as China," said Sam Stovall, chief investment strategist at CFRA Research.

The focus is now on the U.S. Labor Department's more comprehensive jobs report on Friday for further clues on the health of the U.S. economy.

The S&P 500 (SPX) and the Dow (DJI) slipped below their 100-day moving averages for the first time in about a month. Many investors believe that falling below such moving averages means the indexes are likely to fall further.

The S&P 500 is now about 5% below its all-time high hit in July after coming within striking distance of the mark two weeks ago. Over the past 12 months, the S&P 500 is down about 1%.

The Dow Jones Industrial Average (DJI) dropped 1.86% to end at 26,078.62 points, while the S&P 500 (SPX) lost 1.79% to 2,887.61.

The Nasdaq Composite (IXIC) fell 1.56% to 7,785.25.

Volume on U.S. exchanges was 8.0 billion shares, compared with the 7.3 billion average for the full session over the last 20 trading days.

The Cboe Volatility Index, or VIX (VIX), an options-based gauge of investor anxiety, rose 1.9 points to 20.47, its highest in about a month.

Activision Blizzard Inc (O:ATVI) dropped 1.2% after Bernstein downgraded the videogame maker's shares to "market perform."

Ford Motor Co (N:F) shares fell 3.3% after the carmaker reported a fall of about 5% in U.S. auto sales for the third quarter. General Motors Co (N:GM) slumped 4.0% after its quarterly sales came in slightly short of U.S. car shopping website Edmunds' forecast.

Among bright spots, homebuilder Lennar Corp (N:LEN) rose 3.8% after the company reported a better-than-expected profit as cheaper mortgage rates led to higher demand for its homes.

Johnson & Johnson (N:JNJ) gained 1.5% after the drugmaker said it will pay $20 million to settle claims by two Ohio counties, allowing it to avoid an upcoming federal trial seeking to hold the industry responsible for the nation's opioid epidemic.

Declining issues outnumbered advancing ones on the NYSE by a 3.56-to-1 ratio; on Nasdaq, a 2.75-to-1 ratio favored decliners.

The S&P 500 posted three new 52-week highs and 13 new lows; the Nasdaq Composite recorded four new highs and 182 new lows.

Wall Street tumbles as trade war threatens U.S. economy
 

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Comments (15)
Hank Williams
Hank Williams Oct 02, 2019 5:53PM ET
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Now that the Republican party has changed its philosophy about cheap labor overseas to keep US prices down, have they really thought out the details of their new agenda? Where is a Ross Perot when you need him.
Charles Hamilton
Charles Hamilton Oct 02, 2019 5:53PM ET
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Great points. I suppose if you were President it would be nothing but high cotton.
Hank Williams
Hank Williams Oct 02, 2019 5:15PM ET
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"It will be a great deal and it will happen fast."
Chris Jackson
Chris Jackson Oct 02, 2019 5:15PM ET
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It's always a great deal, but no one knows what it is and it never happens!
Michael Kleinert
Michael Kleinert Oct 02, 2019 5:15PM ET
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china does not give a *****about a deal. trump is talking to a king of a country like he is some little punk. the dragon is going to incinerate him and the usa.
Andrew carson
Andrew carson Oct 02, 2019 3:31PM ET
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It's cloudy outside. It must be the trade war .
Chris Sundo
Chris Sundo Oct 02, 2019 2:28PM ET
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--- Let's bid up this market, bottom fishing -- It's just turning up
Erski Gumby
SB20 Oct 02, 2019 2:28PM ET
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There you go. Take a deep breath, focus on the market and make lots of money.
Chris Sundo
Chris Sundo Oct 02, 2019 2:22PM ET
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The way Trump plays with women is another red flag. Women need protection and care not taken advantage of. Women are totally equal to men because they have fantastic strengths where men can't even get to, and women nurture children which are the backbone of our future and so why is Trump being immature about women? --- Men have to reflect maturity at every level to be competent and trustworthy caretakers, not people who think about instant gratification and about how they can beat the system for their short term goals. Trump is too immature for the job of a western leader.
nick bryson
nick bryson Oct 02, 2019 2:22PM ET
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dude grow up. nothing you said has anything to do with the stock market. you want to get all touchy feely go join a book club
scotty wilson
scotty wilson Oct 02, 2019 2:22PM ET
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why don't you take your opinion to Twitter or something Chrisy
Thom Miller
Thom Miller Oct 02, 2019 1:44PM ET
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Trump is cooked!
nick bryson
nick bryson Oct 02, 2019 1:44PM ET
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not yet he isn't. the market will have to go full recession before that happens. last December the markets dropped 15% and his approval is still higher then any of his rivals
Erski Gumby
SB20 Oct 02, 2019 1:44PM ET
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Chris Sundo I think you need a nanny and not a president.
Brady Murray
Brady Murray Oct 02, 2019 1:44PM ET
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Chris Sundo the governments first and only real job is to protect the borders and defend the United States from foreign invaders. Other than that the Constitution provides equal rights and opportunity for all. If you are weak under a capitalist society there are good people and charity to assist you.
James Westmore
James Westmore Oct 02, 2019 1:34PM ET
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Thank the dmeocrats for causing relentless chaos. This will soon pass.
Chris Sundo
Chris Sundo Oct 02, 2019 1:34PM ET
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THANK TRUMP FOR CAUSING RELENTLESS CHAOS. AND GUESS WHAT? -- THE CHAOS is going to continue. People like Trump have a thick skin. They have to bounce back all the sh.. that they attract; They attract that due to the inner sh.. that they are .. pardon my lingo.  -- He means well, but when you cause a stink in so many different areas where your sub-conscious tells you people have been hurt then then the confusion created on one's inside ends moving onto one's outside. And then it reflects in a LONG TRAIL OF BROKEN GLASS dragging behind oneself. Look around him: nothing but broken glass in terms of relationships of any kind, lawsuits, distressed systems of all kind, nature, animals, polar bears walking in the rain, dismantled global heating arrangements, people confused, trading systems confused ... That kind of mess takes years to heal. I saw an employee of my business neighbor act in a similar way; there were lawsuits too, debts, upset relationships and lost credibility. Same for TRUMP!
Erski Gumby
SB20 Oct 02, 2019 1:34PM ET
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Chris Sundo TDS much? lol
Peter Dikeakos
Peter Dikeakos Oct 02, 2019 1:33PM ET
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Same level as January 2018. This could be the other side of the MOUNTAIN!
Ivan Couto Jr
Ivan Couto Jr Oct 02, 2019 1:33PM ET
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There is just AIR in the other side, no ground
Brad Dover
Brad Dover Oct 02, 2019 1:03PM ET
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all this MAGA is giving me heart problems
Atmosphere Mind
Atmosphere Mind Oct 02, 2019 1:03PM ET
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#Dang .. XD
Rico Su
Rico Su Oct 02, 2019 12:57PM ET
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ANybody see Trump twit about this
Erski Gumby
SB20 Oct 02, 2019 12:57PM ET
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He’s busy and on TV right now. He’ll get back to tou shortly.
Rico Su
Rico Su Oct 02, 2019 12:57PM ET
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Erski Gumby Lol, right
Rico Su
Rico Su Oct 02, 2019 12:57PM ET
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Jason Patcher
Jason Patcher Oct 02, 2019 12:56PM ET
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honestly it is refreshing to have data move the market instead of a tweets or headline/fake news.
Ng Zen ng
Ng Zen ng Oct 02, 2019 12:49PM ET
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Trump lol money in his bank .
Rico Su
Rico Su Oct 02, 2019 12:44PM ET
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ANybody see Trump twit about this?
Andrew Gatlin
JustaGuy Oct 02, 2019 12:37PM ET
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Next stop 2,837
Andrew carson
Andrew carson Oct 02, 2019 12:30PM ET
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Someone wake Powell....
Erski Gumby
SB20 Oct 02, 2019 12:30PM ET
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Ronin Trader Yup. That’s the idea.
 
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