Tuesday, 18 December, 2018

United States stocks close sharply lower on rate worries

E-mini Dow Jones Industrial Average Daily March E-mini Dow Jones Industrial Average
Nellie Chapman | 04 March, 2018, 06:45

When U.S. markets opened for trading, the S&P 500 lost as much as 1.1 percent to join a worldwide sell-off after President Donald Trump doubled down on "trade war" talk.

Traders appeared to take a different view, resulting in the Dow Jones Average plummeting 292 points to 24,317 and the S&P 500 plunging 20 points to 2,657.

Dow futures are down 194 points, the index having closed 420 points lower yesterday, while S&P 500 futures are trading over 13 points lower. The Russell 2000 index of small-cap stocks rose 25.78, or 1.7 percent, to 1,533.17.

The S&P 500 fell for a third straight day after President Donald Trump said the US would slap tariffs on steel and aluminum.

Business Roundtable, an association of chief executive officers of America's leading companies, said it strongly disagreed with Trump's announcement because it would hurt the USA economy and American companies, workers and consumers by raising prices which would lead to foreign retaliation against U.S. exporters.

The Dow Jones industrial average fell 503 points, or 2 per cent, to 24,525.

Worries about the possibility of much higher interest rates have been at the centre of the market's troubles over the last month. The two-year yield, which moves more on expectations of Fed movements, rose to 2.23 percent from 2.22 percent.

"Investors are grappling with the prospects of higher than expected interest rates and inflation, and a potentially more hawkish Fed", said Chris Zaccarelli, chief investment officer at Charlotte, North Carolina-based Independent Advisor Alliance. The 30-year yield, which moves more on expectations of future inflation, climbed to 3.11 percent from 3.09 percent. It is down 3.9 percent for February but still up 1.5 percent in 2018.

The Fed's chairman, Jerome Powell, jolted markets on Tuesday, when he said that he's feeling more optimistic about the USA economy.

Kohl's Corp.(KSS) shares dropped 6.4% after disappointing quarterly earnings. Britain's FTSE 100 was flat at 7,284.

The Standard & Poor's 500 index fell 16 points, or 0.6 percent, to 2,661. Its shares dropped $7.71, or 5 percent, to $147.99.

In the commodities markets, Benchmark U.S. crude rose 5 cents to $61.05 per barrel. Brent crude, the worldwide standard, shed 87 cents to $65.76 per barrel. Gold usually rises when investors are feeling more nervous about inflation and the economy.

In the currency markets, the U.S. dollar was buoyed by Powell's comments, rising 0.3% on Wednesday to reach its second-best month of President Donald Trump's term, climbing 1.7% against a basket of currencies overall for the month.

FCA US, the USA unit of Fiat Chrysler Automobiles NV (FCA) sales fell 1% in February to 168,326 vehicles.