US stocks end in the red

Trade developments sent stocks sharply lower

U.S. stocks finished in the red on Tuesday, 19 June 2018 albeit off session lows, as investors shed stocks following President Donald Trump's late-Monday threat to slap an additional $400 billion in tariffs on China goods. The announcement represented the latest escalation in a tit-for-tat dispute between the No. 1 and 2 largest economies in the world, rattling investors.

The Dow Jones Industrial Average fell 1.2%, or 287.26 points, to close at 24,700.21, dragged down by sharp losses in trade-sensitive, industrial stocks Boeing, Caterpillar, and 3M. At its intraday nadir, the Dow was down by as many as 420 points. The S&P 500 fell 11.18 points, or 0.4%, to 2,762.57. The Nasdaq Composite Index shed 21.44 points to 7,725.59, a drop of 0.3%.

Tuesday's decline marked the sixth straight drop for the blue-chip gauge, representing the longest such skid since March 2017, a string of down days that has erased all of 2018's gains thus far. The Dow is down about 0.1% year to date.

Trade developments sent stocks sharply lower. But the developments also boosted the dollar. The ICE U.S. Dollar Index, a measure of the dollar against a half-dozen major currencies, was up 0.3% at 95.06, holding at 2018 highs.

After Beijing's retaliation against U.S. planned tariffs on $50 billion worth of Chinese imports, U.S. President Donald Trump asked U.S. trade representative Robert Lighthizer late Monday to identify $200 billion more in Chinese products that could be subject to tariffs of 10%. The U.S. president also threatened to find $200 billion more worth of goods if China tried to retaliate against those additional tariffs.

Reviewing Tuesday's economic data, it was limited to Housing Starts and Building Permits for May 2018. Housing starts rose to a seasonally adjusted annualized rate of 1.350 million units in May (consensus 1.323 million), up from a revised 1.286 million units in April (from 1.287 million). Separately, Building permits declined to a seasonally adjusted 1.301 million in May (consensus 1.343 million) from a revised 1.364 million in April (from 1.352 million).

Outside of equities, U.S. Treasuries moved higher in a curve-flattening trade that left the 2-10 spread at its lowest level in more than a decade. The yield on the benchmark 10-yr Treasury note slipped three basis points to 2.89%, and the yield on the 2-yr Treasury note finished flat at 2.55%.

Looking ahead, investors will receive on Wednesday the Existing Home Sales report for May (consensus 5.55 million), the Current Account Balance for the first quarter (consensus -$129.2 billion), and the weekly MBA Mortgage Applications Index.

Powered by Capital Market - Live News