FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 24, 2019. REUTERS/Brendan McDermid/File Photo
May 7, 2019
By Amy Caren Daniel
(Reuters) – Wall Street’s main indexes tumbled more than 1 percent on Tuesday, as renewed worries over trade negotiations with China stoked global growth worries and kept investors away from risky assets.
Beijing said on Tuesday that Chinese Vice Premier Liu He will visit the United States this week for trade talks, playing down U.S. President Donald Trump’s unexpected threat on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.
Trade tensions also pushed U.S. treasury yields lower as investors turned to low-risk government bonds, pressuring interest rate sensitive banking stocks, which fell 1.69%. [US/]
“Many had been looking at this week as providing a potential breakthrough in talks between the world’s two largest economies, yet we instead have seen the U.S. threaten a raft of new tariffs,” Joshua Mahony, senior market analyst at IG, wrote in a note.
“Much of the gains of the eventual deal have been factored into market valuations and thus there is a substantial risk that markets could jolt lower if the direction of talks shift towards more, rather than less barriers to trade.”
Boeing Co, the single largest U.S. exporter to China, slipped 2.7% and Caterpillar Inc declined 1.9%.
All the major S&P sectors were trading in the red, with technology companies posting the steepest decline of 2%.
The CBOE Volatility Index, a gauge of investor anxiety, spiked to its higher level in over three months.
At 10:55 a.m. ET the Dow Jones Industrial Average was down 355.41 points, or 1.34%, at 26,083.07. The S&P 500 was down 42.23 points, or 1.44%, at 2,890.24 and the Nasdaq Composite was down 138.67 points, or 1.71%, at 7,984.62.
Marquee names including Microsoft Corp, Apple Inc, Amazon.com Inc and Facebook Inc fell more than 1.7% and weighed on markets.
The earnings season has now reached its homestretch. Of the 414 S&P companies that have reported earnings so far, about 75% have surpassed analysts’ estimates, according to Refinitiv data.
The upbeat reports have turned around earnings estimates for the first quarter to an almost 1.2% rise, a sharp improvement from the 2.3% decline expected at the start of the earnings season.
American International Group Inc jumped 6.7%, the most among S&P companies, after the insurer reported a quarterly profit that blew past expectations.
Among decliners, Mylan NV tumbled 17% after the drugmaker missed Wall Street estimates for quarterly revenue, hurt partly by manufacturing problems at its Morgantown plant in West Virginia.
Shares of Regeneron Pharmaceuticals Inc fell 5% after the drugmaker missed quarterly profit estimates.
Declining issues outnumbered advancers for a 4.26-to-1 ratio on the NYSE and for a 2.95-to-1 ratio on the Nasdaq.
The S&P index recorded four new 52-week highs and four new lows, while the Nasdaq recorded 37 new highs and 22 new lows.
(Reporting by Amy Caren Daniel and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur)
