Wall Street slips as financials drag, trade uncertainties

Reuters NEW YORK | Updated on August 28, 2019

Dow down 0.48%, S&P 500 drop 0.33%, Nasdaq fell 0.34%

Wall Street slipped on Tuesday, weighed down by financial stocks as a deepening of the Treasury yield curve inversion raised U.S. recession worries and uncertainty over any progress in trade negotiations between the United States and China took a toll.

U.S. stocks initially advanced, building on Monday's bounce, as President Donald Trump forecast another round of talks with Beijing. China's foreign ministry, however, reiterated on Tuesday that it had not received any recent U.S. telephone call on trade.

A deepening of the inversion in the yield curve between the 2-year and 10-year U.S. Treasuries underscored worries about a weakening global economy.

“It is going to be pretty confusing and unfortunately, without some kind of a major backpedalling on trade, to maybe slow things down and push things out, the economy is going to suffer,” said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.

The Dow Jones Industrial Average fell 124.66 points, or 0.48%, to 25,774.17, the S&P 500 lost 9.53 points, or 0.33%, to 2,868.85, and the Nasdaq Composite dropped 26.79 points, or 0.34%, to 7,826.95.

Financial shares, which tend to weaken in lower-rate and soft economic environments, lost 0.72%, while the defensive utility sector led advancing groups, edging up 0.14%.

The S&P 500 has lost nearly 4% in August on worries over the impact of the intensifying U.S.-China trade war on the slowing global economy and corporate profits, along with uncertainty around the pace of U.S. interest rate cuts from the Federal Reserve.

With the next Federal Reserve meeting scheduled for mid-September, investors are gauging the strength of the U.S. economy for clues on where rates are headed. The release next week of the government's closely watched monthly jobs report and manufacturing data will give investors factors to consider before the policy announcement.

Among individual stocks, Johnson & Johnson shares rose 1.44% after an Oklahoma judge said the drugmaker must pay $572.1 million for its part in fuelling the U.S. opioid epidemic, a sum that was substantially less than what investors had expected.

Declining issues outnumbered advancing ones on the NYSE by a 1.71-to-1 ratio; on Nasdaq, a 2.41-to-1 ratio favoured decliners.

The S&P 500 posted 29 new 52-week highs and 36 new lows; the Nasdaq Composite recorded 38 new highs and 210 new lows.

About 6.29 billion shares changed hands in U.S. exchanges, compared with the 7.57 billion daily average over the last 20 sessions.

Published on August 28, 2019

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