U.S. stocks traded sharply lower Tuesday afternoon, after President Trump criticized China in a United Nations speech, undermining investor sentiment that had improved on hopes for successful trade talks in October.
Equities extended their losses after U.S. House Speaker Nancy Pelosi, when asked about launching impeachment proceedings against the president, said she would make an announcement later Tuesday after meeting with Democratic Party leadership and House committee chairman.
What are major indexes doing?
The Dow Jones Industrial Average DJIA, -0.88% fell 207 points, or 0.8%, to 26,742 while the benchmark S&P 500 SPX, -1.12% was off 30 points, or 1%, at 2,961. The Nasdaq Composite index COMP, -1.74% fell 127 points, or 1.6%, to 7,987.
Stocks put in a mixed performance Monday, with the Dow rising 14.92 points, or 0.1%, to 26,949.99, while the S&P 500drifted lower by 0.29 point, or less than 0.1%, to 2,991.78. The Nasdaq Composite gave up 5.21 points, or 0.1%, to end at 8,112.46.
What’s driving the market?
Equities turned sharply lower after it appeared the chances that the House of Representatives pursuing an impeachment inquiry against President Trump were on the rise. When asked about impeachment, Pelosi told NBC news, “Later today I will make an announcement after I meet with my chairmen, my leadership and my caucus.”
Calls for taking action against the president have risen during the past week, after reports alleged the president used the threat of withholding economic aid to Ukraine to pressure officials in Kiev to produce information damaging to Democratic presidential candidate Joe Biden, whose son Hunter Biden has had business dealings in Ukraine.
“I think the impeachment news is driving this,” said Willie Delwiche, equity strategist at R.W. Baird told MarketWatch. “It doesn’t need to be a commentary on impeachment specifically, but it just creates more uncertainty,” for a market that is already facing an uncertain future on trade relations with China and a 2020 election that is quickly approaching, he added.
With Democratic presidential candidate Elizabeth Warren rising in some Democratic primary polls, the threat of impeachment underscores the chances that someone investors see as unfriendly will ascend to the White House, Delwiche said. “Policies aside, presidential campaigns are about rhetoric,” he said. “The lesson of the last year and a half is that talk matters, sometimes even more than action.”
Markets were already trending lower after Trump accused China of manipulating its currency and stealing intellectual property in a U.N. speech to world leaders only weeks before U.S. - China trade talks. Earlier global equity markets were buoyed by modest optimism around the trade talks U.S. Treasury Secretary Steven Mnuchin late Monday told Fox Business Network that the deputy-level negotiations between the two countries had made some progress.
Early morning gains indicated that “the market wants to move forward, but investors need to see something to get enthused about,” said Karyn Cavanaugh, senior market strategist at Voya Investment Management, in an interview. “Trump’s speech at the U.N. wasn’t conciliatory at all. There was hope we’d get positive trade news this week but as the day continued you’ve had disappointments that have crept in.”
Weak U.S. and global economic data is also weighing on investor sentiment.
In U.S. economic data, the September U.S. Conference Board’s consumer confidence index slipped to 125.1, a three month low, from 133.3, as escalating trade tensions with China undermined confidence, underscoring the dangers of a conflict that has harmed key business sectors such as manufacturing and farming and poses a threat to a record U.S. economic expansion.
”Consumer confidence plunged in September which counts as a big surprise that may sidetrack the economic expansion that is relying on consumer spending to fuel growth,” wrote Chris Rupkey, chief financial economist for MUFG. “This unwelcome news on souring consumer spirits is a startling new development that could even bring more rate cuts later this year from the Federal Reserve.”
The U.S. S&P Case Shiller home-price index for July rose 2% year-on-hear in July, the slowest pace of home price apprecation since 2012.
Earlier, Germany’s closely watched Ifo business climate index rose slightly to 94.6 in September from 94.3 in August. The expectations component of the index, however, fell to its lowest level since June 2009. The data followed more weak economic data from Germany and the eurozone on Monday with growth almost grinding to a halt in the third quarter and Germany suffering its worst downturn in almost seven years a manufacturing slump deepens.
What stocks are in focus?
Netflix NFLX, -4.91% fell sharply on analysts’ concern about earnings, given the competition from Disney and other streaming video platforms.
Alphabet’s Google GOOG, -1.80% won a European court fight over tougher “right to be forgotten” rules. Europe’s top court ruled that Google does not have to remove links to sensitive personal data worldwide, as demanded by French authorities.
Starbucks SBUX, -1.17% won an appeal against a European Union demand to pay up to $33 million in back taxes to the Netherlands.
Facebook FB, -3.32% announced the acquisition of start-up CTRL-labs for an undisclosed amount. CTRL-labs explores ways for people to communicate using brain signals.
Shares of BlackBerry Ltd. BB, -20.84% fell sharply after posting weaker-than-expected numbers for its fiscal second quarter.
How are other markets trading ?
U.S. Treasury yields fell on Tuesday after a consumer confidence indicator sagged, suggesting the bedrock of the U.S. expansion may be developing cracks under the pressure of global growth worries and continuing trade tensions. The 10-year Treasury note yield TMUBMUSD10Y, -4.60% was lower at 1.67%.
Gold prices moved up Tuesday, giving up earlier losses after President Donald Trump criticized China and took a hard-line stance on Iran during his speech at the United Nations General Assembly, pressuring U.S. stocks and boosting the metal’s haven appeal. Gold for December delivery GCZ19, +0.48% on Comex was up 0.5% to about $1,540 an ounce, while December silver SIZ19, -0.65% declined 0.4%, to $18.64 an ounce.
Oil futures declined Tuesday, under pressure as traders see signs that Saudi Arabia is making progress in restoring production following attacks on processing facilities as well as concerns over the global demand picture. West Texas Intermediate crude for November delivery CLX19, -2.27%, the U.S. benchmark, was down 2.2%, at $57.34 a barrel.
In Asia overnight, the China CSI 300 000300, +0.27% was little changed around 3,901 while Japan’s NIK, +0.09% Nikkei 225 index was also steady at 22,098.