Stocks fell sharply Tuesday after new signs that the global economy is weakening and reports of difficulties in U.S.-China trade talks. That decline broke a four-day winning streak for U.S. indexes.
Major global indexes fell after the International Monetary Fund trimmed its economic forecasts for 2019 and 2020 and pointed to risks including trade tensions and rising interest rates. China’s government said its economy grew in 2018 at the slowest pace since 1990.
U.S. stocks took further losses after the Financial Times reported that the Trump administration canceled a proposed meeting with Chinese trade officials this week.
Technology and internet companies skidded, and energy companies sank with oil prices. Industrial companies also fell, hurt by the slower growth forecast and trade concerns as well as some weak fourth-quarter earnings. Bond prices climbed as investors looked for safer investments.
“We began last year, 2018, with a synchronized global recovery, and what we have now is a slowdown globally,” said Quincy Krosby, chief market strategist at Prudential Financial. She said the reported difficulty in trade talks “has shaken up confidence that the U.S. and China are moving closer in the negotiating phase.”
The Standard & Poor’s 500 index slid 37.81 points, or 1.4%, to 2,632.90. The Dow Jones industrial average fell 301.87 points, or 1.2%, to 24,404.48. The Nasdaq composite sank 136.87 points, or 1.9%, to 7,020.36. The Russell 2000 index of smaller-company stocks declined 25.05 points, or 1.7%, to 1,457.45.
Lately, global markets have rallied as investors began to feel that a slowdown in the world economy might not be that painful. The S&P 500 is up 5% in 2019 and has jumped 12% since hitting its recent low Dec. 24. But Tuesday’s losses were a reminder that investors will remain sensitive to clues that the global economy is weakening, and the trade dispute may be the top threat to economic growth.
According to the Financial Times, two officials were scheduled to travel to the United States ahead of meetings between the U.S. and China’s top trade representatives next week. It said the meetings were canceled because of a lack of progress on some key issues, underscoring how far apart the two sides remain.
Technology and industrial companies took some of the biggest losses. Farm equipment company Deere fell 3.5% to $158.84. Chipmakers dropped, with Nvidia falling 5.2% to $148.77.
Aluminum products maker Arconic slumped 16% to $17.09 after it said it is no longer considering a sale. Formerly a part of aluminum giant Alcoa, Arconic said it didn’t receive any offers it thought were in its best interests. The stock has gyrated over the last few months after reports the company was considering a sale.
Power tools maker Stanley Black & Decker sank 15.5% to $115.69 after its forecast for 2019 fell short of Wall Street estimates.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.74% from 2.78%.
Home builders sank after U.S. home sales cratered in December and price growth declined to the lowest level in more than six years.
EBay jumped 6.1% to $32.90 after activist investment firm Elliott Management disclosed a 4% stake in the online marketplace and pushed it to make changes.
British Prime Minister Theresa May presented her Plan B for Britain’s exit from the European Union on Monday, but the plan looks a lot like the original. It’s not clear if she can win approval in Parliament, which gave her previous plan a resounding “no” last week. The European Union has said it won’t renegotiate that deal.
Britain is scheduled to leave the European Union in a little more than two months. If it doesn’t have a trade deal in place, that could cause major hardships for numerous companies, especially banks.
U.S. crude slid 2.3% to $52.57 a barrel in New York. Brent crude, used to price international oils, fell 2% to $61.50 a barrel in London.
Natural gas dived 12.7% to $3.04 per 1,000 cubic feet. Wholesale gasoline fell 3.5% to $1.40 a gallon. Heating oil fell 0.8% to $1.90 a gallon.
Gold rose 0.1% to $1,283.40 an ounce. Silver slipped 0.5% to $15.33 an ounce. Copper fell 2.2% to $2.66 a pound.
The British FTSE 100 index slid 1%. Germany’s DAX and CAC 40 in France both gave up 0.4%. Japan’s Nikkei 225 index shed 0.5% and the Kospi in South Korea sank 0.3%. Hong Kong’s Hang Seng lost 0.7%.