Make available futures tumbled on Monday night, adding to Wall Street’s losses from its worst day of 2019 amid whetting trade-war fears.
Dow Jones Industrial Average futures traded 127 points lower, implying a loss of 249.74 directs at Tuesday’s open, as of 11:27 p.m. ET Monday. S&P 500 and Nasdaq 100 futures also indicated losses.
The Dow and S&P 500 submerged 2.9% and nearly 3%, respectively, on Monday while the Nasdaq Composite lost 3.5%.
“We are seeing another gut check after lineages had the best start to a year since 1997 (through July),” said Keith Lerner, chief customer base strategist at SunTrust Private Wealth, in a note. “We already thought the environment would become more challenging over and above the short term heading into the seasonally weaker period of August through October. The latest trade escalation has served to exacerbate this usual weakness.”
Monday’s move lower added to a sell-off that began last week when President Donald Trump betokened new tariffs on Chinese goods and the Federal Reserve disappointed traders by not signaling aggressive monetary easing later in 2019.
After the new price-lists were unveiled, China let the yuan break to its lowest level against the dollar in more than 10 years on Monday. China has historically managed its currency.
The Cache Department designated China as a currency manipulator on Monday night after Trump accused them of being one in a tweet. Trump implied in the tweet: “This is a major violation which will greatly weaken China over time.”
He tweeted later in the day that it is “now flush more obvious to everyone that Americans are not paying for the Tariffs – they are being paid for compliments of China, and the U.S. is prepossessing in tens of Billions of Dollars.”
China also confirmed earlier reports that it was suspending the purchases of U.S. agricultural offerings.The U.S.-China trade war has been going on since last year, dimming sentiment and the outlook for corporate profits and trade growth.
“The primary risk to the U.S. economy now is not the accounting effects of tariffs and/or exchange rates, but a decline in economic confidence and a bedewing in the animal spirits that have fueled growth over the past several years,” said Willie Delwiche, investment strategist at Baird. “Depleting prospects for the economy add to near-term headwinds for the stock market.”
“This could spell further near-term volatility for varieties. A pullback could provide an important test of the recently improved breadth trends and also help provide a more favorable attitude backdrop,” said Delwiche.
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