Here Are 3 Hot Things to Know About Stocks Right Now
- The Dow Jones Industrial Average ended down Tuesday amid ongoing trade tensions between the U.S. and China, mounting political risks in Europe, and shrinking manufacturing activity.
- Apple (AAPL) - Get Report shares fell on President Trump's move to boost tariffs on China-made goods that include, for the first time, some of the tech giant's key products. Apple is Real Money's Stock of the Day.
- Shares of Boeing (BA) - Get Report were down after American Airlines (AAL) - Get Report again extended the grounding of the Boeing BA 737 MAX aircraft, leaving the troubled new jets locked up through Dec. 3.
Wall Street Overview
Stocks ended down Tuesday with investors finishing the first trading day of September in retreat as new U.S.-China trade tariffs kicked in, political turmoil grew in Europe and U.S. manufacturing activity contracted.
The Dow Jones Industrial Average, which fell as much as 425 points at one point, finished down 285 points, or 1.08%, to 26,118. The S&P 500 slid 0.69%, and the Nasdaq was off 1.11%.
September has historically been the worst month for stocks, with the market averaging a 1% drop.
CNBC reported that R. Martin Chavez, global co-head of Goldman's securities division and a member of the management committee, would retire at year-end. Chavez joined the company in 1993. Goldman shares were down 2.6% to $198.52 on Tuesday morning.
Stocks were battered by news that the ISM U.S. manufacturing PMI (purchasing managers' index) declined to 49.1 in August, the lowest reading since January 2016. Any reading below 50 signals a contraction. U.S. 10-Year treasury yields fell to their lowest level since 2016 and were recently down 0.029 to 1.479%.
Gold rose $15.45, or 1%, to $1,546.60 an ounce.
"The negative surprise all but assures a rate cut by the Fed this month, and the odds of a more substantial 0.5% easing step are also much higher," said Ken Berman, Gorilla Trades strategist.
"Markets have been especially sensitive to trade and geopolitical headlines over the past week, so more volatility may be ahead with several global issues still unresolved," LPL Financial said in a newsletter. "September has also historically been a rough month for U.S. stocks."
President Donald Trump's decision to increase tariffs on China-made goods with a 15% tariff on $110 billion in new products kicked in on Sunday. Beijing responded with levies of 5% on $75 billion of goods -- including crude oil exports -- and lodged its third formal compliant with the World Trade Organization over the U.S.'s use of import duties.
Trump has said officials from both sides were still planning to meet later this month. China's state-backed People's Daily wrote that "if the U.S. truly wants to reach a mutually benefiting and win-win deal with China, some people in the U.S. must honor the consensus, work in concert with the Chinese side and return to the right track with sincerity."
Washington is also set to increase tariffs on a further $250 billion of goods on Oct. 1, with levies doubling to 30%, and consumer-based taxes rising on another $160 billion in China-made goods, including laptops and mobile phones, on Dec. 15.
The U.K. pound early Tuesday fell below $1.20, its lowest level since January 2017, after Prime Minister Boris Johnson dared moderate lawmakers in his ruling Conservative Party to either back his government's plans to leave the EU on Oct. 31 or face expulsion from the party and a national election later next month. The pound later recovered some ground after a Tory MP left the party, costing Johnson his working majority in parliament.
Politicians opposed to a no-deal Brexit will attempt to seize the parliamentary schedule and pass a bill that would effectively prevent Johnson from taking Britain out of the EU on October 31 without a deal.
Dom Catrambone, CEO of Volshares Large-Cap ETF (VSL) in Philadelphia, said investors returning to the markets after the holiday weekend are facing a lot of information.
"What sparks market volatility is uncertainty," he said. "There's uncertainty about the next meeting with China and is the meeting going to happen. Coupled with that, we have the manufacturing report, where survey managers said the key point was the uncertainty with the trade negotiations. The industrials have taken a hit today."
On top of this, Catrambone said, is the news surrounding Brexit.
"I don't think the markets are doing too badly for that information at one time," he said.
Meanwhile, Hurricane Dorian began to move slowly northwestward toward the U.S. on Tuesday afternoon, after raging through the Bahamas for more than a day and killing at least five people. Dorian was most recently a Category 2 storm with sustained winds of 110 miles per hour.
Apple (AAPL) - Get Report shares were falling 1.5% to $205.70 as Trump's move to boost tariffs on China-made goods that include, for the first time, some of the tech giant's key products. Apple is Real Money's Stock of the Day.
Shares of Boeing (BA) - Get Report were down 2.7% to $354.45 after American Airlines (AAL) - Get Reportextended the grounding of the Boeing BA 737 MAX aircraft, leaving the troubled new jets locked up through Dec. 3.
Airlines around the globe halted flights on Boeing 737 MAX jets following two fatal crashes in Ethiopia and Indonesia. United Airlines (UAL) - Get Report also said it was extending its cancellation of the MAX aircraft by another month, until Dec. 19.
Walmart (WMT) - Get Report said it will stop selling rifle bullets that can also be used in military-style guns, one month 22 people were killed in a mass shooting in El Paso, Texas. The company also said that it will call on leaders in Washington to take action to curb gun violence, among other steps. Shares were up slightly to $114.67.
Global oil prices were weaker Tuesday, but came off earlier lows, as both China's decision to levy U.S. crude exports and the ongoing weakness in factory output data pushed prices down.
Brent crude contracts were down 39 cents to $58.27 a barrel, while West Texas Intermediate contracts, which are more tightly linked to U.S. gas prices, were $1.13 lower at $53.97 a barrel.