Wall Street drops on US trade tensions with EU, IMF global outlook

Traders work on the floor of the New York Stock Exchange February 4, 2019. — Reuters pic
Traders work on the floor of the New York Stock Exchange February 4, 2019. — Reuters pic

NEW YORK, April 10 — Trade-sensitive industrials dragged lower yesterday as tensions over tariffs between the United States and its European trading partners went from simmer to boil and the IMF lowered its outlook.

All three major indexes finished the session in the red, with the S&P 500 ending its eight-day rally.

US President Donald Trump said he would impose tariffs on US$11 billion (RM45 billion) of European goods, raising tensions over aircraft subsidies that threaten to morph into a wider trade war.

“The European tariff thing caught people by surprise, just as we were working through the (trade) issues,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

Trade disputes, along with Britain’s potentially messy exit from the European Union, led the International Monetary Fund (IMF) to cut its growth forecasts and warn that further cuts could follow.

“With the IMF … you’re getting two data points that indicate that things may soften up over the next several months,” Tuz added. “It gives some people reason enough to take money off the table.”

“(But) we’re right on the cusp of earnings season which could change everything.”

First-quarter earnings season is set to begin in earnest, with Delta Airlines reporting today and JPMorgan Chase & Co and Wells Fargo & Co results due on Friday, kicking off what analysts now expect to be the first quarter to show a year-on-year decline in profits since 2016.

-March earnings for S&P 500 companies are now seen falling by 2.5 per cent from last year, according to Refinitiv data.

The Dow Jones Industrial Average fell 190.44 points, or 0.72 per cent, to 26,150.58, the S&P 500 lost 17.57 points, or 0.61 per cent, to 2,878.2 and the Nasdaq Composite dropped 44.61 points, or 0.56 per cent, to 7,909.28.

Of the 11 major sectors in the S&P 500, all but utilities and communications services ended the session in the red.

Industrials posted the biggest percentage loss, falling 1.4 per cent.

Boeing Co extended its slump after reporting a drop in deliveries related to the grounding of its 737 MAX jets. Its shares fell 1.5 per cent.

The grounded Boeing aircraft led American Airlines Group Inc to trim its first-quarter revenue forecasts. The airliner’s stock slid 1.7 per cent.

US Steel Corp slid by 10.0 per cent following ’s downgrade of the stock to “underperform.”

Wynn Resorts Ltd dipped 3.9 per cent after ending takeover talks with Crown Resorts.

The Philadelphia SE Semiconductor index backed off from Monday’s record high, falling 1.1 per cent.

Among winners, Facebook Inc rose 1.5 per cent after Morgan Stanley upped its , citing growing revenues from its Instagram segment.

Levi Strauss & Co jumped 2.7 per cent ahead of its first quarterly report since its IPO.

Walt Disney Co shares advanced 1.7 per cent following Cowen’s upgrade to “outperform.”

Declining issues outnumbered advancing ones on the NYSE by a 2.74-to-1 ratio; on Nasdaq, a 2.70-to-1 ratio favoured decliners.

The S&P 500 posted 17 new 52-week highs and no new lows; the Nasdaq Composite recorded 51 new highs and 28 new lows.

Volume on US exchanges was 6.31 billion shares, compared to the 7.26 billion average over the last 20 trading days. — Reuters

Source: The Malay Mail Online

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