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Dow posts triple-digit decline on economic and trade concerns

Arconic was the biggest loser on the S&P 500 Index after its board decided against a sale

Wall Street sign
Caterpillar and DowDuPont were the worst-performing blue-chips

Stocks fell Tuesday as signs of a global economic slowdown and renewed trade concern triggered caution among investors.

The International Monetary Fund cut its forecast on Monday for global economic growth this year to 3.5% from 3.7%. In addition, a report indicated that China’s economy expanded this year at its slowest pace since 1990.

Stocks extended their decline after The Financial Times reported that the US had canceled preparatory trade discussions with Chinese officials. But Larry Kudlow, head of the National Economic Council, told CNBC that there has been no cancellation.

The Dow Jones Industrial Average decreased 301.87 points, or 1.2%, to 24,404.48. The Nasdaq Composite fell 1.9% to 7,020.36. 

Caterpillar Inc (NYSE:CAT) and DowDuPont (NYSE:DWDP) were the biggest losers on the Dow index, both falling more than 3% on the latest obstacle to a US-China trade deal.

Johnson & Johnson (NYSE:JNJ) dropped 1.5% after the health products giant projected that sales growth would slip this year over pricing pressure.

The S&P 500 Index dropped 1.4% to 2,632.90 while the Russell 2000 index of small-caps declined 1.7% to 1,457.45.

Arconic Inc (NYSE:ARNC) was the biggest laggard among the S&P 500 stocks, tumbling 16% after its board decided against a sale. The private equity firm Apollo Global Management LLC had been pursuing a deal to acquire the metals manufacturer for more than $10 billion, The Wall Street Journal reported.

Up in Canada, Toronto’s TSX was down 0.8% to 15,233.76.

13:45 PM: US stocks hit new lows on FT report that US scrapped trade meeting with China

US stocks hit new lows in afternoon trade on Tuesday after the US scrapped a trade meeting with Chinese trade representatives.

According to a report in The Financial Times, US President Donald Trump’s administration rebuffed an offer by a pair of Chinese vice-ministers to travel to the US this week for initial trade discussions due partly to stalled progress on “structural” reforms to China’s economy as well as the transfer of technology.

The news sent the Dow Jones Industrial Average spiraling lower by 361 points to hit 24,345 in afternoon trade. Dragging down the blue-chip index were Caterpillar (NYSE:CAT), which fell 3.2%; Dow DuPont (NYSE:DWDP), which dropped 2.8%; and Goldman Sachs (NYSE:GS), which was down 2.6%.

Johnson & Johnson (NYSE:JNJ) also dropped by 2% to hit $127.94 after the health products giant projected that it would see sales growth slip this year as it faces pressure on pricing.

Ranking high on the list of laggards as well was the metals manufacturer Arconic Inc (NYSE:ARNC), which fell 17% to $16.88, after its board opted to rebuff a leveraged buyout by the private-equity group Apollo Global Management.

The tech-laden Nasdaq also fell sharply, losing 132 points to hover at 7,024, with Baidu (NASDAQ:BIDU), the company behind China’s largest search engine, ranking as the index’s worst performer with a 6.4% fall.

Elsewhere, the S&P 500 slipped by 1.55% to 2,629 while the Russell 2000 shed 1.87% to 1,454.

Up in Canada, Toronto’s TSX was also off 165 points at 15,188.

9:45 AM: US stocks slip on global growth worries amid the escalation of geopolitical risks

US stocks opened lower Tuesday after the International Monetary Fund trimmed its global outlook for 2019 and 2020 amid the escalation of geopolitical risks around US-China trade, Brexit, and slowing capital investments.

China reported its economy expanded by 6.6% in 2018. This was the slowest pace of growth since 1990 and it fueled fears a trade dispute with Washington is putting a drag on the world’s second largest economy.

The Dow Jones Industrial Average fell 137.22 points, or 0.56% to 24,569.13 led lower by Caterpillar and DowDuPont which both fell more than 2%.

The S&P 500 opened lower by 20.96 points or 0.78% to 2,649.75 led lower by Arconic Inc which plunged 18.3% after it said it was no longer pursuing a sale of the company. Media reports said a private-equity firm was looking to buy the company for more than $10 billion.

The Nasdaq Composite dropped 47.66 points, or 0.67% to 7,109.57 at the opening bell.

Elsewhere, the Russell 2000 index of small-cap stocks fell 0.64% to 1,472.94.

7:15 am: US benchmarks set to start sharply lower as traders fret about global growth; Davos summit kicks off

US stocks are poised to start steeply lower after the pause in proceedings for Martin Luther King Day, as traders fret about the prospects of the world economy, and the government shutdown enters its fifth week with no sign of a break-through.

The International Monetary Fund (IMF) has issued its latest economic outlook, saying it had lowered estimates for global growth in 2019 by 0.2% to 3.5%.

Risks include the ongoing trade spat between the US and China and the potential of the UK exiting the European Union without a divorce deal.

 

It comes as world leaders arrive in the town of Davos in Switzerland for the World Economic Forum.

 

Last Friday, Wall Street shares went higher, with the Dow Jones Industrial Average closing up over 336 points at 24,706, and the S&P 500 adding nearly 35 at 2,670.

The tech-heavy Nasdaq index added over 72 points to close at 7,157.

In futures trade Tuesday, the Dow Jones is down 165 points, while the Nasdaq futures are down around 58. The S&P 500 futures are down over 19 points.
Asian stocks closed lower overnight. The Nikkei 225 lost over 96 points at 20,622. The Shanghai Composite Index lost nearly 31 points at 2,579.

In Europe, the FTSE 100 is lower as sterling strengthened, weakening the index which is heavy with dollar earnings constituents, after strong UK jobs data. Wage growth between September and November, including bonuses, was the best reading in a decade, while employment reached an all-time high of 75.8%.

The German DAX is off at the time of writing, while the French CAC 40 is also lower.

If the US government shutdown ends this week, there are nine commerce and economic reports in the backlog, which will rise to 11 with this Friday's durable goods data and new home sales, so we could have a deluge of stats at the end of the week.

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