US Markets

Wall Street dips as financials weigh, trade hopes dim

Credit: REUTERS/EDUARDO MUNOZ

Wall Street slipped on Tuesday, weighed down by financial stocks as a deepened yield curve raised U.S. recession worries, while uncertainty reigned on the progress of trade negotiations between the U.S. and China.

By Chuck Mikolajczak

NEW YORK, Aug 27 (Reuters) - Wall Street slipped on Tuesday, weighed down by financial stocks as a deepened yield curve raised U.S. recession worries, while uncertainty reigned on the progress of trade negotiations between the U.S. and China.

U.S, stocks initially opened higher, building on Monday's advance, as U.S. President Donald Trump predicted 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.

Further weighing on sentiment was a deepening of the inversion in the yield curve between the 2-year and 10-year U.S. TreasuriesUS2US10=RR, underscoring worries about a weakening global economy. [nL2N25N10J]

"The progression of trade talks seem to occur very much in real time and it is the primary influence around what it is driving the capital markets at this point," said Bill Northey at U.S. Bank Wealth Management in Minneapolis.

"You have this degree of uncertainty and what has seemed to be a period of heightened uncertainty, that certainly does impact confidence and confidence does drive behaviors like spending and investing, which ultimately manifest in economic activity."

The Dow Jones Industrial Average .DJIfell 94.15 points, or 0.36%, to 25,804.68, the S&P 500 .SPXlost 8.7 points, or 0.30%, to 2,869.68 and the Nasdaq Composite .IXICdropped 32.57 points, or 0.41%, to 7,821.16.

Financial shares.SPSY, which tend to weaken in lower rate and soft economic environments, lost 0.84%, while defensive sectors such as utilities .SPLRCU and real estate .SPLRCR led advancing sectors.

The S&P 500 has lost nearly 4% in August on worries the impact of the intensifying U.S.-China trade war will have 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. They will have data on the labor market and manufacturing next week to consider before the policy announcement.

Among stocks, Johnson & Johnson JNJ.N shares rose 1.93% after an Oklahoma judge said J&J must pay $572.1 million for its part in fueling the U.S. opioid epidemic, a sum that was substantially less than what investors had expected.

Philip Morris International PM.N shares fell 7.42% after the tobacco maker said it was in talks with Altria Group Inc MO.N to combine in an all-stock merger of equals. Altria's shares were down 3.53%.

Shares in J. M. Smucker Co SJM.N tumbled 7.03% after the packaged food maker cut its full-year earnings forecast and missed estimates for quarterly profit and sales.

Declining issues outnumbered advancing ones on the NYSE by a 1.57-to-1 ratio; on Nasdaq, a 2.51-to-1 ratio favored decliners.

The S&P 500 posted 28 new 52-week highs and 29 new lows; the Nasdaq Composite recorded 33 new highs and 188 new lows.

(Reporting by Chuck Mikolajczak; Editing by Dan Grebler)

((charles.mikolajczak@tr.com; @ChuckMik; +1 646 223 5234; Reuters Messaging: charles.mikolajczak.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More