Stocks tanked Tuesday as the goodwill generated by a truce between the U. S. and China over trade evaporated over confusion about what the two…
Stocks tanked Tuesday as the goodwill generated by a truce between the U. S. and China over trade evaporated over confusion about what the two sides had actually agreed upon.
The Dow Jones industrial average fell about 800 points. The yield on the benchmark 10-year Treasury note declined to its lowest level in three months, a signal that the bond market is worried about long-term economic growth.
The sell-off short-circuited a recent rally on Wall Street. The market gained Monday after the Trump administration said the U. S. and China agreed to a temporary cease-fire in a trade dispute. Last week, stocks jumped when the Federal Reserve’s chairman indicated the central bank could slow the pace of interest rate increases.
But investors’ confidence in the U. S.-China agreement faltered Tuesday after a series of confusing and conflicting words from President Trump and some senior officials. That contributed to renewed fears that the disagreement between the two economic powerhouses could slow the global economy.
“This trade issue is the big overhang, the biggest ceiling, if you will, to keeping the markets from moving higher,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab.
Technology companies, banks and industrial stocks accounted for much of the broad sell-off. Utilities stocks rose. Smaller-company stocks fell more than the rest of the market.
Big losses for Boeing and Caterpillar, major exporters which would stand to lose much if trade tensions persist, weighed on the Dow.
The bond market signaled its concerns as the gap between two-year and 10-year Treasurys reached its narrowest difference since 2007. The 10-year yield is still higher, but not by much.
