Stocks sink on Wall Street as new tariff threat looms
This is a file image of various stocks.
Damian J. Troise, The Associated Press
Published Tuesday, May 7, 2019 1:35AM EDT
Last Updated Tuesday, May 7, 2019 1:46PM EDT
NEW YORK -- Stocks fell broadly on Wall Street Tuesday after U.S. President Donald Trump's threat to escalate a trade war moved closer to reality.
U.S. Trade Representative Robert Lighthizer said higher tariffs on China will take effect on Friday. The deadline for more tariffs looms over negotiations, which are set to resume on Thursday in Washington.
Every sector fell, extending the markets losses into a second day. Technology companies and banks led the decline. Utilities, normally safe-play holdings for investors, fared better than the rest of the market. Bond prices also rose as investors sought out other ways to reduce risk.
Microsoft fell 2% and Intel fell 1.6%, leading losses in the sector. JPMorgan Chase fell 1.3% and Bank of America fell 1.7%.
The tougher rhetoric from the U.S. on trade surprised investors who had been expecting that the world's biggest economies would come to some sort of agreement. The ongoing feud has raised costs on goods for consumers and companies.
KEEPING SCORE: The S&P 500 index fell 1.4% as of 12:42 p.m. The Dow Jones Industrial Average fell 392 points, or 1.5%, to 26,032. The Nasdaq composite fell 1.6%.
ANALYSTS' TAKE: Investors will likely have to deal with a volatile market as the U.S. and China continue negotiating with a looming tariff increase this week.
"This is such a short period of time that it's hard to speculate whether this will cause something to get done quickly or whether it will drag on for months," said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute.
But, the market is still in good shape, he said, citing the overall rise in stocks this year.
The rise in stocks is partly because of investor confidence that there will be a deal. That may have added too much complacency to the market, said Mark Hackett, chief of investment research for Nationwide Investment Management.
"We've basically flipped from being too pessimistic to perhaps being too optimistic," he said.
WEAK DOSE: Investors punished Mylan's stock after the generic drugmaker reported weak sales growth that fell short of forecasts. The company and its peers have been dealing with pressure to lower drug prices. The stock fell 16.5%.
GOOD INSURANCE: American International Group rose 7.6% after beating Wall Street's first quarter profit forecasts. It was one of the relatively few gainers in S&P 500. The insurer's solid quarter was driven by growth in underwriting revenue and premiums.
STROLLING: Footwear company Crocs rose 2% after beating Wall Street's profit and revenue forecasts for the first quarter. The company cited improvement in direct-to-consumer sales as a key factor in revenue growth.