Economy

Markets Right Now: Stocks turn jittery again, Dow sinks 500

Markets Right Now: Stocks turn jittery again, Dow sinks 500”

A day after global stocks rallied on a weekend US-China announcement suspending new tariffs, global markets mostly pulled back as investor focus shifted to the murkiness over what was agreed to and the difficulty reaching resolution to disputes on thorny matters such as intellectual property. Concerns about the USA economy also rattled investors, with the gap between long-term and short-term bond yields the narrowest in a decade. The spread between the 10-year yield over its two-year counterpart also shrank to the smallest in over a decade, a closely watched signal because a so-called yield curve "inversion", when the two-year yields more than the 10-year bond, preceded all the recessions of the past 50 years.

Stock and bond trading will be closed in the U.S. Wednesday in observance of a national day of mourning for former President George H.W. Bush.

"The sense is that there's less and less agreement between the two sides about what actually took place", Delwiche said. Apple (NASDAQ: AAPL) fell by 4.4%, Netflix (NASDAQ: NFLX) fell by 5.1%, Alphabet (NASDAQ: GOOG) fell by 4.8%, while Facebook saw the smallest loss of 2.2%. Despite the short-lived news of trade war tensions settling, markets quickly plunged the next day, marking the fourth worst decline in history.

Large banks were among the big losers, with JPMorgan Chase shedding 4.4 per cent, Bank of America losing 5.4 per cent and Citigroup 4.4 per cent.

The focus now is on the spread between the two-year and 10-year yields, currently at its narrowest in over a decade and whose inversion has preceded the past three U.S. recessions.

The jitters helped drive demand for government bonds today, pushing prices higher. Hovnanian Enterprises led most builders lower, giving up 10.3 percent to $1.10. The slide in bond yields, which affect interest rates on mortgages and other consumer loans, weighed on bank stocks. Advanced Micro Devices dropped 9.4 per cent to $21.49, while Micron Technology lost 6.4 per cent to $37.47.

Amid fears of slowing USA growth, Dollar General Corp sank 8% after warning that the proposed tariffs on Chinese imports could begin to have a greater impact on its business as well as its customers.

Oil prices rose. OPEC members are expected to agree at a Thursday meeting to cut output in 2019.

Defensive Utilities .SPLRCU eked out a 0.2 percent gain, the only one of the 11 major S&P 500 sectors in positive territory. Benchmark U.S. crude rose 0.6 per cent to $53.27 per barrel in NY.

The dollar weakened to 112.82 yen from 113.69 yen late Monday. Shares also fell in Taiwan and all other regional markets. The euro strengthened to $1.1349 from $1.1342.

European markets fell on Tuesday, with Germany's DAX losing 1.1 percent and France's CAC 40 dropping 0.8 percent. Hong Kong's Hang Seng added 0.3 percent.



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