Here Are 3 Hot Things to Know About Stocks Right Now

  • The Dow Jones Industrial Average retreated after Beijing suggested it might ban exports of so-called rare earth elements.
  • Shares of Abercrombie & Fitch (ANF - Get Report) fell sharply after the apparel retailer reported soft first-quarter same-store sales.
  • Dick's Sporting Goods (DKS - Get Report)  fell even though the company reported quarterly net income and sales that handily beat analysts' forecasts and raised its full-year guidance.

Wall Street Overview

Stocks finished off their lows Wednesday, but markets were rattled by sinking bond yields and the escalating U.S.-China trade war that saw Beijing threatening to ban exports of so-called rare earth elements that are integral to many high-tech products.

Special Counsel Robert Mueller, meanwhile, spoke publicly for the first time about his investigation into Russian interference with the 2016 presidential election. Mueller, who announced his retirement, said "if we had confidence that the president had clearly not committed a crime, we would have said so." He said that "charging the president with a crime is not an option we could consider" under Justice Department regulations.

The Dow Jones Industrial Average, which at one point fell more than 400 points, ended down 221 points, or 0.87%, to 25,126, the S&P 500 dropped 0.69%, and the Nasdaq lost 0.79%.

Leading the Dow into negative territory were Johnson & Johnson (JNJ - Get Report) , off, 4.2%, Nike (NKE - Get Report) , down 2.9%, and Boeing (BA - Get Report) , down 1.7%.

China controls more than 80% of the world's rare earth element market, despite sitting on just more than a third of global reserves, thanks in part to a decades-long commitment to an expensive -- and environmentally damaging -- production process.

"Will rare earths become a counter weapon for China to hit back against the pressure the United States has put on for no reason at all? The answer is no mystery," an editorial in the People's Daily newspaper said Wednesday.

LPL Financial Research said in a recent note that commentary in Chinese media included a Chinese phrase translating to "don't say we didn't warn you," which is significant because it was used before the China-India and China-Vietnam conflicts.

"These threats have been lingering for a while, though, and there are ways that restricting rare earth exports could backfire on China," LPL Financial Research said. "Overall, we still remain optimistic that a trade agreement will come soon, even if the talks hit speed bumps along the way."

Mike Loewengart, vice president of investment strategy at E*Trade, said that "we should all keep in mind that while fears are definitely justified regarding tariffs and weakness abroad, the U.S. economy is still on very solid footing."

"Jobs are strong, and earnings season was far stronger than most predicted," he said. "Some of this volatility may be self-made as earnings is in the rear-view and there's not much else to focus on except trade.  All major indexes remain decidedly up for the year though, so as of now it's pretty natural to see cooling off periods like we've seen this past month."

Falling bond yields also weighed on the minds of investors who continue to favor fixed income assets amid escalating trade tensions, slowing growth and tepid inflation. The 10-year Treasury note yield fell to its lowest level since September 2017 before rising to 2.26%.

"We are slowly, but surely, letting the bonds talk us into a recession," said TheStreet's co-founder Jim Cramer on Real Money Pro. "That means we are going to need the Fed to take back the last rate hike and start selling bonds. I think, though, given the recent nature of the rate boost, more data has to come out to justify the cut than just the 10-year's activity itself and theories about what it means."

Retailers suffered on Wednesday. Shares of Abercrombie & Fitch (ANF - Get Report)  tumbled 26.6% to $18.37 after the apparel retailer reported soft first-quarter same-store sales.

Sports retail chain Dick's Sporting Goods ( DKS - Get Report)  shares fell 6% to $33.65 even though the company reported quarterly net income and sales that handily beat analysts' forecasts and raised its full-year guidance.
 
Canada Goose Holdings ( GOOS - Get Report) went south after the outdoor apparel maker missed Wall Street's fiscal fourth-quarter revenue expectations. Shares sank 31% to $33.89.
 
Boeing's ( BA - Get Report) 737 MAX jet may not return to service until August, according to the head of the International Air Transport Association. Shares were off 1.7% to $348.90.
 
Qualcomm ( QCOM - Get Report) asked a federal judge not to enforce her antitrust ruling against the chipmaker as it plans to file an appeal that could take more than a year to wind through the courts, Reuters reported. Shares rose slightly to $65.76.
 
 

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