WASHINGTON, Aug 2 — Wall Street’s main indexes sank to one-month lows today after a sharp escalation in US-China trade tensions and tepid job growth in July reinforced fears of a global economic slowdown.
The Labour Department said nonfarm payrolls increased by 164,000 jobs last month and the economy created 41,000 fewer jobs in May and June than previously reported. However, July’s numbers were in line with economists’ expectations.
“Job numbers were not too far from expected. It shows the trend is slowing down. It’s consistent with another rate cut either in September or October,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
“The bigger issue for the Fed policy outlook is tariffs because that implies you will see higher costs for finished goods rather than intermediate goods that we have been importing from China.”
The jobs report comes a day after President Donald Trump threatened to slap a 10 per cent tariff on US$300 billion (RM1.2 trillion) of Chinese imports from next month, sending global markets tumbling overnight and investors fleeing to safe-haven US Treasuries and the Japanese yen.
China today said it would not be blackmailed and warned of retaliation.
Technology companies, which get a sizeable portion of their revenue from China, were the hardest hit, down 1.34 per cent, weighed by iPhone maker Apple Inc and chipmakers.
The Philadelphia Semiconductor index slipped 1.06 per cent, while shares of Apple fell 1.5 per cent.
Boeing Co, the single largest US exporter to China, fell 0.8 per cent and Caterpillar Inc declined 0.6 per cent.
The sudden escalation in trade rhetoric follows the Federal Reserve on Wednesday playing down expectations of further aggressive monetary policy actions after cutting interest rates for the first time in a decade.
Hopes that the Fed would be more accommodative to counter the impact of the bruising trade war had helped Wall Street’s main indexes hit record highs last month. Fed funds futures implied traders were positioned for a 100per cent chance the central bank would reduce its target range on interest rates by a quarter point in September, CME Group’s FedWatch program showed.
At 9:46am ET, the Dow Jones Industrial Average was down 128.15 points, or 0.48 per cent, at 26,455.27, the S&P 500 was down 16.70 points, or 0.57 per cent, at 2,936.86. The Nasdaq Composite was down 68.59 points, or 0.85 per cent, at 8,042.53.
The defensive utilities sector rose 0.3 per cent, while a surge in oil prices helped the energy sector eke out small gains.
The second-quarter earnings season is in full swing, with 74.4 per cent of the 355 S&P 500 companies that have reported so far beating profit estimates, according to Refinitiv data.
NetApp Inc slumped 20.7 per cent after the data storage equipment maker lowered its forecast for the first quarter and 2020, blaming a weakening macro environment.
Declining issues outnumbered advancers for a 2.24-to-1 ratio on the NYSE and for a 2.25-to-1 ratio on the Nasdaq.
The S&P index recorded four new 52-week highs and four new lows, while the Nasdaq recorded seven new highs and 76 new lows. — Reuters
Source: The Malay Mail Online