Here Are 3 Hot Things to Know About Stocks Right Now
- The Dow Jones Industrial Average closed down nearly 400 points Monday as fears of a global recession from the U.S.-China trade war weighed on Wall Street and falling bond yields and unrest in Hong Kong dented sentiment.
- Viacom (VIAB) shares declined following reports the media giant was close to a merger agreement with CBS (CBS) . Viacom is Real Money's Stock of the Day.
- General Electric (GE) shares were down after JPMorgan analyst Stephen Tusa said he's holding on to his "below consensus" underweight rating on the stock.
Wall Street Overview
Stocks finished sharply lower Monday as fears of a global recession from the U.S.-China trade war weighed on Wall Street, while falling bond yields and unrest in Hong Kong dented sentiment.
It was the second straight day that stocks finished in the red.
The Dow Jones Industrial Average, which lost as much as 462 points, ended the session down 391 points, or 1.49%, to 25,896, the S&P 500 declined 1.23% and the Nasdaq was off 1.20%.
Bond yields added to investors' woes. The benchmark 10-year Treasury yield resumed its slide from last week and was off 0.089 to 1.645% recently. The spread between 2-year and 10-year Treasury yields narrowed to only 6 basis points on Monday, CNBC reported, near its lowest level since 2007.
"It's a manic Monday," said Mike Loewengart, vice president of investment strategy at E*Trade. "Last week's trade tensions really put us on more fragile footing to start the week and today we're seeing the markets react to falling bond yields. And, with key inflation news on deck for tomorrow morning we could continue to see volatility if there is a meaningful deviation from the Fed's sweet spot. Spikes in volatility can spook many investors, but it's critical to stay the course in times like these."
Hong Kong International Airport was abruptly closed Monday as pro-democracy demonstrators flooded into one of the world's busiest terminals amid the 10th week of protests in the China-ruled territory that have officials -- and investors -- growing increasingly concerned. Officials were looking to open the airport early Tuesday.
Goldman Sachs said in a note to clients that fears the U.S.-China trade war will lead to a recession have increased. The investment bank doesn't expect a trade deal between the world's two largest economies before the U.S. presidential election in 2020.
U.S. stocks closed lower on Friday after President Donald Trump said he wasn't ready to reach a trade deal with China and that it would be "fine" if trade talks don't take place next month.
Goldman Sachs lowered its forecast for U.S. growth in the fourth quarter by 20 basis points to 1.8% on a larger-than-expected impact from the trade developments.
"Unlike previous rounds of tariffs deployed by this administration, these new tariffs would largely impact the consumer, with duties being placed on goods such as clothing, footwear and toys," said Glenmede Trust's Investment Strategy Team in a research note.
"The consumer has acted as the engine driving forward this record-long expansion as manufacturing slows, but these tariffs may likely erode their spending power."
As tariffs remain in place, the note from Glenmede said, they likely will have a lasting effect on the level of real GDP growth, causing it to run below potential.
"However, we estimate their effect on the growth of real GDP will last only for the 12-month period after they go into effect," the note said.
Shares in China on Monday rose 1.45% -- the most in more than a month -- after China's central bank set the yuan at a stronger-than-expected 7.0211 to the dollar.
Last week China let the yuan slip through 7 to the lowest levels against the dollar in more than a decade, leading the Trump to declare China a currency manipulator.
Trump said Aug. 1 that the U.S. on Sept. 1 would levy 10% tariffs on an additional $300 billion of Chinese imports in a bid to push Beijing to reduce its huge trade imbalance with the U.S. The threat from Trump prompted China to halt purchases of U.S. agricultural products.
Viacom (VIAB) shares were off 4.9% to $28.53 following reports the media giant was close to a merger agreement with CBS (CBS) . Shares of CBS were off 1.7% to $48.06. Viacom is Real Money's Stock of the Day.
Shares of General Electric (GE) fell nearly 1.1% to $9.05 after JPMorgan analyst Stephen Tusa said he's holding on to his "below consensus" underweight rating on the stock even after last month's stronger-than-expected second-quarter earnings.
In the energy sector, Brent crude contracts for October delivery, the global benchmark, were down 8 cents to $58.45 a barrel, while West Texas Intermediate contracts for September, which are more tightly linked to U.S. gas prices, were up 21 cents at $54.71 a barrel.
Caterpillar, Goldman Sachs and Viacom are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.