Wall Street losses deepen on growth, trade worries

/ 06:56 AM December 05, 2018
20181121 US Stocks Wall Street Technology Plunge Dive

A trader works at his desk during the closing bell on the floor of the New York Stock Exchange (NYSE), on November 20, 2018, in New York City. The Dow sank as much as three percent on Tuesday afternoon, Dec. 4, 2018, as losses on Wall Street accelerated amid worries about the US economic outlook and skepticism over the US-China trade truce. AFP FILE

NEW YORK, United States – The Dow sank as much as three percent Tuesday afternoon as losses on Wall Street accelerated amid worries about the US economic outlook and skepticism over the US-China trade truce.

Near 1900 GMT, the Dow Jones Industrial Average stood at 25,179.89, down about 650 points, or 2.5 percent after earlier slumping as much as 3.1 percent.


The broad-based S&P dropped 2.4 percent to 2,722.31, while the tech-rich Nasdaq Composite Index slumped 2.9 percent to 7,227.48.

The drop came amid a signal from government bond rates seen as an early-warning indicator of a US recession, as well as the confusing status of the touted US-China agreement to halt their trade war.


The movements in the bond market “clearly show that growth is likely to slow next year and inflation too,” said Karl Haeling of LBBW. “But predicting a recession if the curve inverts is getting ahead of ourselves.”

The difference in yield between the two- and 10-year US Treasury notes has narrowed sharply in recent days, raising concerns about a so-called “inversion” in which interest on short-term bonds overtakes the rate on long-term bonds.

Large banks were among the big losers, with JPMorgan Chase shedding 4.4 percent, Bank of American losing 5.7 percent and Citigroup 5.6 percent.

The gloomier outlook comes as the global economy shows signs of weakness, with some analysts pointing to China as a potential worry. Investors view low long-term bond yields as a sign of worry that growth will be anemic.

Analysts said Tuesday’s decline in stocks also reflected rising skepticism about a weekend announcement that US President Donald Trump intended to halt new tariffs on China for 90 days while the two countries work out a long-term trading deal.

Markets reacted enthusiastically to the announcement on Monday, which was accompanied by hopeful commentary in Chinese state media.

But by Tuesday the gloss had worn off as many observers noted the two sides remained far apart on several key issues. /cbb


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TAGS: Business, Dow Jones, Growth, Stock Market, trade war, Wall Street
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