Published: Fri, December 07, 2018
Markets | By Otis Pena

Wall Street reels as Dow Jones falls over 800 points

Wall Street reels as Dow Jones falls over 800 points

On Tuesday, President Trump has declared himself a "Tariff Man" in tweeting about the state of progress with China, doubling down the threat to raise tariffs on Chinese goods if a deal isn't solidified.

"The market is reassessing if anything tangible happened at the Trump-Xi dinner", Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company, told MarketWatch. This has not occurred since 2007.

Shares were moderately lower in Asia on Wednesday following a bloodletting on Wall Street as goodwill generated by a truce between the US and China over trade evaporated in confusion over exactly what the two sides had agreed upon.

USA futures also augured a downbeat start for Wall Street after markets were closed Wednesday to mourn the death of former President George H.W. Bush.

The trade dispute has rattled markets in recent months as signs emerged that it has begun affecting corporate profits.

The movements in the bond market "clearly show that growth is likely to slow next year and inflation too", said Karl Haeling of LBBW.

The comments came after those from Fed chair Jerome Powell last week, which lifted stocks as they were interpreted as suggesting a less aggressive path of rate hikes.

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Bond prices rose sharply.

While the more closely watched part of the Treasury yield curve - the gap between two-year and 10-year yields - remains upwardly sloped, it flattened to just 15 basis points Monday. The slide in bond yields, which affect interest rates on mortgages and other consumer loans, weighed on bank stocks.

Bank of America fell 5.7 percent.

Financial shares .SPSY , which are particularly sensitive to bond market swings, dropped 4.4 percent. Advanced Micro Devices dropped 9.4 per cent to $21.49, while Micron Technology lost 6.4 per cent to $37.47. The Organization for Economic Cooperation and Development forecast that global growth would slow from 3.7 percent this year to 3.5 percent in 2019 and 2020. Morgan Stanley analysts said in a note that the market was underestimating the challenge those companies would face from Amazon Air. Benchmark U.S. crude gained 0.6 percent to settle at $53.25 per barrel in NY.

The dollar weakened to 113 yen from 113.69 yen late Monday. The euro declined to $1.1330 from $1.1343. The British pound fell to $1.2716 from $1.2728. Silver rose 1 percent to $14.64 an ounce.

The technology sector fell 2.80%, while industrials dropped 3.47% over a lack of specifics on the Sino-US trade truce, including no written commitments and when the truce period starts. Germany's DAX lost 1.1 per cent, while France's CAC 40 dropped 0.8 per cent.

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