Renewed concerns about economic growth overseas – specifically Europe and China – weighed on markets on Tuesday, causing stocks to erase all of the previous day’s gains.
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PULLED DEPOSITS: The global economic worries caused more losses for two of the hardest-hit sectors in the US stock market this year: energy and banks. A surprise interest rate cut in Australia also raised concerns about central banks’ ability to boost sluggish growth, which in turn contributed to lower US yields.
The Standard & Poor’s 500 index lost 18 points, or 0.9 per cent, to 2,063.
The Dow Jones industrial average (.DJI) closed down 140.25 points, or 0.78 percent, to 17,750.91, the S&P 500 (.SPX) lost 18.06 points, or 0.87 percent, to 2,063.37 and the Nasdaq Composite (.IXIC) dropped 54.37 points, or 1.13 percent, to 4,763.22. Worries about China were largely responsible for the turmoil in global financial markets in the early part of the year.
AUSTRALIA WORRIES: Compounding the worries about China, Australia’s central bank unexpectedly cut interest rates to a record low. The S&P 500 was down 23.75 points, or 1.14 percent, at 2,057.68.
“We are reacting to the negative news overnight from China and Europe, and investors are waiting for the jobs data”, said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.
Exxon shares were down 1.4 per cent, while Schlumberger fell 3.3 per cent, making them the biggest drags on the S&P energy sector.
Recovering oil prices and an accommodative Federal Reserve have helped the S&P 500 rise roughly 14 percent since mid-February.
ENERGY: Benchmark U.S. crude oil rose 44 cents to $45.22 a barrel in electronic trading on the New York Mercantile Exchange.
The unemployment report is scheduled to be released on Friday.
After raising interest rates in December for the first time in almost a decade, the Fed held monetary policy steady last week. However, the index faltered last week, weighed down by lackluster earnings and mixed economic data.
The United States could see two more interest rate hikes this year but uncertainties abound including the impact on the economy should Britain vote to leave the European Union, Atlanta Fed President Dennis Lockhart said today. It was the first rate cut in about a year, and the move is meant to combat weak inflation, a common problem around the globe.
Dow member Pfizer jumped 2.7 percent as first-quarter earnings climbed 26.9 percent to $3.0 billion. In other energy trading in NY, wholesale gasoline fell 5 cents to $1.51 a gallon, heating oil fell two cents to $1.33 a gallon and natural gas rose four cents to $2.086 per 1,000 cubic feet. Brent crude, the worldwide standard, gained 46 cents to $46.29.
Bond prices rose. The yield on the 10-year Treasury note fell to 1.80 per cent. Speculators have reduced their net euro short positions for six consecutive weeks, while net dollar long positions fell last week to their lowest since June 2014, according to strategists at Rabobank.
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Spot gold prices were last down 0.42 per cent, at $1,285.81 an ounce.
