U.S. Stocks, Bond Yields Fall Amid Trade Tensions
23 May 2019 - 5:44PM
Dow Jones News
By Michael Wursthorn and Will Horner
The Dow Jones Industrial Average fell about 400 points Thursday
after the latest flare-up in U.S.-China trade tensions quelled
investors' expectations of a near-term resolution between the
world's two biggest economies.
Shares of technology, industrial and financial companies all
fell, as investors cut their exposure to more risky assets and
sought protection in U.S. Treasurys, sending yields on the
benchmark 10-year note to its lowest level since late 2017. The
trade angst also rocked energy stocks, which slid alongside a
more-than-5% pullback in U.S. crude oil prices.
Thursday's losses dragged the Dow industrials lower for the
week, putting the blue-chip index at risk of posting its fifth
consecutive weekly loss -- its longest losing streak since
2011.
The latest rhetoric from Chinese officials sent stocks tumbling
after Ministry of Commerce spokesperson Gao Feng told CNBC that the
U.S. should "adjust its wrong actions" if it would like to continue
negotiations. Investors worry the U.S. and China are moving further
apart on trade, potentially exposing U.S. companies and the economy
to further retaliation.
"Everything is in the red today," said Larry Peruzzi, managing
director of international equity trading at Mischler Financial.
"China is digging in and it seems like things are getting worse.
It's just putting together a very negative sentiment for the
market."
The Dow industrials fell 406 points, or 1.6%, to 25368 in recent
trading, while the S&P 500 shed 1.5%. The Nasdaq Composite gave
up 1.8%.
The steady barrage of negative trade developments is showing
signs of wearing on investors. About 24% of investors were bullish
at the start of March, according to the American Association of
Individual Investors' latest survey, its lowest reading since late
December and down from nearly 40% earlier this month.
Nearly all 11 major S&P 500 sectors were down in recent
trading, with the exception of utility stocks, which investors tend
to favor for their dividends during periods of economic
uncertainty.
Most technology stocks were trading lower after several more
companies backed away from Huawei Technologies in the wake of U.S.
trade restrictions against the Chinese telecommunications giant.
U.K.-based chip design company Arm Holdings is suspending business
with Huawei, The Wall Street Journal reported. Some mobile-phone
carriers in Japan and the U.K. have also suspended launches of
Huawei smartphone models.
Shares of Amazon.com, Facebook, Microsoft and Apple all gave up
more than 1%, as investors worry the trade spat will increasingly
pressure U.S. technology companies that have a significant exposure
to China.
The S&P 500's industrial stocks, which are also viewed as
bystanders in a U.S.-China trade spat, gave up 1.7%.
Energy companies posted some of the biggest losses. The sector
slid 3.3% due to a 5.1% pullback in U.S. crude oil after the trade
spat raised doubts about the near-term appetite for the
commodity.
Shares of Tesla were among the few companies to gain some ground
during Thursday's trading session. The electric car maker's stock
added 2.4% after reports that it had more 50,000 in net new orders
for the current quarter.
The yield on the benchmark 10-year U.S. Treasury note,
meanwhile, fell to 2.348%, according to Tradeweb, putting it on
pace to close at its lowest level since late 2017. That pushed the
10-year's yield, which falls as prices rise, below the yield on the
three-month Treasury bill for the first time since May 15 -- a
potential harbinger of further economic tumult.
Losses weren't restricted to the U.S.
The Stoxx Europe 600 dropped 1.4% as investors contended with a
drop in business sentiment in Germany and weaker demand for
eurozone exports. In Asia, the Shanghai Composite slipped 1.4%,
Hong Kong's Hang Seng traded 1.6% lower and Japan's Nikkei lost
0.6%.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
May 23, 2019 12:29 ET (16:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.