Wall Street drops more than 1pc on Trump tariff comments
NEW YORK, March 2 — The Dow and S&P 500 registered a third straight day of more than 1 per cent declines yesterday after President Donald Trump said the United States would impose import tariffs on steel and aluminum, raising concern about higher prices and a trade war.
The declines put the Dow into negative territory for the year and drove the Cboe Volatility Index to its highest close since Feb 13, denting the market’s recent recovery from deep losses in early February.
Shares of auto makers and other big consumers of steel and aluminum added to their session losses after Trump said the US would impose tariffs of 25 per cent on steel imports and 10 per cent on imported aluminum next week, while shares of US steel and aluminum companies jumped.
On the day, General Motors Co shares lost 4 per cent, while Ford Motor Co was down 3.0 per cent. US Steel shares rose 5.7 per cent, while shares of Nucor climbed 3.3 per cent.
Industrial heavyweights like Boeing and Caterpillar also fell as investors worried about higher raw material costs and trade barriers elsewhere. Boeing was down 3.5 per cent and Caterpillar was down 2.8 per cent.
“It’s always a concern about what’s the retaliatory response to this. Underlying all of these trade issues here, when you have trade wars, is again fueling inflation, because presumably prices are going to be higher,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
The Dow Jones Industrial Average fell 420.22 points, or 1.68 per cent, to 24,608.98, the S&P 500 lost 36.16 points, or 1.33 per cent, to 2,677.67 and the Nasdaq Composite dropped 92.45 points, or 1.27 per cent, to 7,180.56.
The S&P 500 is down 3.7 per cent since Monday’s close. Yesterday’s fall marked its third straight day of declines of at least 1 per cent, the first such streak for the index since January 2016.
Last month confirmed a 10-percent correction for the S&P, which is still down more than 6 per cent from its Jan. 26 record high.
Stocks had mostly traded lower before Trump’s announcement.
Federal Reserve Chairman Jerome Powell tried to temper remarks he made on Tuesday that raised concerns about the potential for four interest rate hikes this year rather than the Fed’s forecast of three, but New York Fed President William Dudley, speaking in Sao Paulo, Brazil, was a bit more pointed and said four rate hikes would be “gradual.”
Indexes edged lower following Dudley’s remarks, but investors said it was the tariff issue that drove the afternoon selloff.
“We got in and out of monetary policy concerns pretty well and this caught us by surprise,” said Art Hogan, chief market strategist at B. Riley FBR in New York.
Declining issues outnumbered advancing ones on the NYSE by a 1.47-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favoured decliners.
The S&P 500 posted two new 52-week highs and 25 new lows; the Nasdaq Composite recorded 43 new highs and 100 new lows.
About 9.0 billion shares changed hands on US exchanges. That compares with the 8.4 billion daily average for the past 20 trading days, according to Thomson Reuters data. — Reuters
Source: The Malay Mail Online