Economy

Weak factory data, trade frictions pull Wall Street lower

Weak factory data, trade frictions pull Wall Street lower

The Dow Jones Industrial Average fell 285.26 points, or 1.1%, at 26,118.02, and the S&P 500 fell 0.7% to 2,906.27. The entire back and forth has now unsurprisingly dented US stock markets as The Dow, S&P 500 and Nasdaq have begun bleeding. Weak manufacturing data also dented investor sentiment. -China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders, Timothy Fiore, the Chair of the ISM Manufacturing Business Survey Committee said.

Chipmakers, which draw a large portion of their revenue from China, also fell, with the Philadelphia Semiconductor index.SOX down 1.9%.

On Wall Street, the future for the benchmark Standard & Poor's 500 index was off 0.6% with trading due to resume after a three-day weekend. The Nasdaq composite fell 1.1% to 7,874.16.

Trade-sensitive industrials fell 1.4%, making for the biggest percentage loser among the S&P 11 major sectors.

J.P, Morgan Chase's stocks fell 1.2% with other financial institutions falling deeper as Bank of America, as well as Citigroup, shed 1.7% and 1.5% respectively. The less closely watched Markit PMI for August came in a 50.3, above the previous estimate of 49.9, but still the lowest reading since September 2009.

The Dow Jones opened 390.69 lower on Tuesday after Washington slapped a 15% tariff on over $125bn-worth of Chinese goods on Sunday, while China imposed its own new charges on some USA products, although some reports indicated that Beijing was, in fact, proceeding more slowly. Nvidia fell 1.7% and Qualcomm lost 1.4%.

Oil prices fell 3.4% and dragged energy stocks lower.

"A contraction in the manufacturing sector, which we haven't seen for a very long time, is important because it has a tendency to be a leading indicator for the rest of the economy including the services sector", said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin.

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OVERSEAS: European stocks fell broadly and the British pound dropped to its lowest level against the USA dollar in 34 years - excluding a brief "flash crash" in 2016 that may have been caused by technical glitches - as the United Kingdom faces a potentially chaotic exit from the European Union.

The energy sector tumbled almost 2% and was the biggest loser among the 11 major S&P sectors, as rising OPEC and Russian crude output drove a 4% slump in oil prices. The price of gold rose 1.5%.

Bond prices rose, sending yields lower.

US casino operators felt the brunt of slowing economic growth in China as gambling hub Macau posted an 8.6% decline in August casino revenue, sending shares of Wynn Resorts Ltd, Las Vegas Sands Corp and MGM Resorts International down between 3% and 4%.

Investor optimism about U.S.

"With new tariffs coming into effect and the global backdrop continuing to weaken the threat of a recession is rising, which will force the Fed into further rate cuts", said analysts at ING. The 10-year note yield declined to 1.47%.

The dollar fell to 106.03 Japanese yen from 106.19 yen on Monday.

Britain's Parliament was due to reconvene after Prime Minister Boris Johnson's office said he would call an early election if his opponents pass legislation that would block his plans to leave the European Union by an October 31 deadline.