Wall Street stocks sold off sharply on Friday, with all three major US stock indices posting their biggest one-day percentage declines since Jan. 3 as weak factory data from the US and Europe led to an inversion of US Treasury yields, fueling fears of a global economic downturn.
Capping five tumultuous days of trading, the S&P 500, the Dow Jones Industrial Average and the NASDAQ Composite were all down for the week.
A weaker-than-expected reading of US factory activity this month, along with similarly dour reports from Europe and Japan, helped send US Treasury yields into an inversion, with the spread between yields of three-month Treasury bills exceeding those of 10-year notes for the first time since 2007.
An indication of near-term risk, and seen by many as a potential harbinger of recession, the inverted Treasury yield curve seemed to confirm investor fears of a global slowdown in economic growth.
“To some extent, what’s going on with the yield curve has been exaggerated,” said Bernard Baumohl, managing director and chief global economist at the Economic Outlook Group LLC in Princeton, New Jersey. “I would not leap to the conclusion that an recession is imminent.”
However, Baumohl warned against complacency.
“There are real clouds that are forming on the horizon. The question is how dark are those clouds going to be and will they trigger a recessionary storm,” he said.
Earlier in the week, the US Federal Reserve concluded its two-day monetary policy meeting with a statement that forecast no additional interest rate hikes this year on signs of economic softness, a dovish shift that took the markets by surprise.
Interest rate-sensitive financial firms fell 2.8 percent, capping their worst week since a sell-off in late December last year.
The Dow Jones Industrial Average fell 460.19 points, or 1.77 percent, to 25,502.32, the S&P 500 lost 54.17 points, or 1.90 percent, to 2,800.71 and the NASDAQ Composite dropped 196.29 points, or 2.5 percent, to 7,642.67.
Of the 11 major sectors in the S&P 500, all but utilities ended the session in the red.
For the week, the Dow Jones lost 1.34 percent, the S&P fell 0.8 percent and the NASDAQ slid 0.6 percent.
The CBOE Volatility Index, a gauge of investor anxiety, on Friday jumped the most in two months.
Nike Inc shares dipped 6.6 percent after the sportswear company’s North American sales fell short of estimates.
Luxury retailer Tiffany Inc said it expected earnings growth to resume in the second half of the year and affirmed its fiscal targets for this year, sending its shares up 3.1 percent.
Electric automaker Tesla Inc slid 3.5 percent following a research note from Cowen Inc that saw soft US demand for the Model 3 until the release of the company’s lower-priced model in the second quarter.
Boeing Co continued to fall, losing 2.8 percent as Indonesian airline Garuda canceled a US$6 billion order for the company’s 737 MAX planes, citing customer fear in the wake of the Ethiopian Airlines crash.
Netflix Inc dropped 4.5 percent on the eve of Apple Inc’s launch of a rival streaming service tomorrow.
Declining issues outnumbered advancing ones on the New York Stock Exchange by a 3.69-to-1 ratio; on NASDAQ, a 4.90-to-1 ratio favored decliners.
The S&P 500 posted 54 new 52-week highs and five new lows; the NASDAQ Composite recorded 25 new highs and 87 new lows.
Volume on US exchanges was 8.66 billion shares, compared to the 7.71 billion average over the past 20 trading days.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS