UPDATE: Dow ends nearly 270 points lower on weak manufacturing data, trade concerns
By Chris Matthews, MarketWatch , Joy Wiltermuth
President Trump announces steel tariffs on Brazil, Argentina
Major stock indexes saw their biggest one-day fall in nearly eight weeks on Monday, after U.S. manufacturing data showed a continued contraction in November and fresh trade jitters put investors on the defensive.
What are major indexes doing?
The Dow Jones Industrial Average fell 268.37 points, or 0.9%, to end at 27,783.04, while the S&P 500 index lost 27.11 points, or 0.8%, to finish at 3,113.87. The Nasdaq Composite Index fell 97.48 points or 1.1%, closing at 8,567.99.
The losses were the sharpest one-day percentage and point drops for all three indexes since Oct. 8, according to Dow Jones Market Data.
Stocks also ended lower in an abbreviated session Friday following the Thanksgiving Day holiday, but posted solid November gains. The Dow fell 112.59 points on Friday, or 0.4%, to end at 28,051.41, leaving it with a 3.7% monthly gain. The S&P 500 declined 12.65 points, or 0.4%, to close at 3,140.98, booking a 3.4% monthly rise. The Nasdaq Composite lost 39.70 points, or 0.5%, to end at 8,665.47, notching a 4.5% monthly gain.
Read:Will a Santa Claus rally power the S&P 500 and Dow to their best years in a generation? (http://www.marketwatch.com/story/will-a-santa-claus-rally-power-the-sp-500-and-dow-to-their-best-years-in-a-generation-2019-11-30)
What's driving the market?
Stocks were pulled lower by a disappointing U.S. manufacturing survey that pointed to a fourth straight month of contraction for the sector, with the Institute for Supply Management's purchasing manager's index unexpectedly falling to 48.1% in November (http://www.marketwatch.com/story/us-manufacturing-sector-weakens-further-in-november---ism-2019-12-02) from 48.3% in October. Economists polled by MarketWatch expected a reading of 49.2%. Readings below 50% reflect business conditions worsening.
"The ISM report wasn't encouraging, especially if you look at the new orders component," said Shawn Cruz, manager of trader strategy at TD Ameritrade, in an interview. "Construction also came in on the downside. This puts pressure on the other data points due this week, like the jobs numbers on Friday. Consumer sentiment will be another important data point on Friday."
The data overshadowed a separate survey on U.S. manufacturing released by Markit on Monday, which showed the sector gaining steam, with a 52.6 reading, versus October's 52.2.
Andrew Hunter, senior U.S. economist at Capital Economics, cautioned that manufacturing still wasn't "out of the woods," in a client note on Monday, and warned that conditions underlying manufacturing "remain unusually weak."
Adding to the jitters are higher U.S. stock valuation levels, which Cruz warned can make "the market prone to sudden, fast corrections," particularly if investors think the slowdown in manufacturing is accelerating, or there are concerns about the health of the consumer.
Investors also got a sharp reminder of the potential for negative trade headlines, with earlier stock gains erased after Trump accused Brazil and Argentina of "presiding over a massive devaluation of their currencies, which is not good for our farmers." Trump tweeted that, effective immediately, "I will restore Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries."
See: Trump brings back tariffs on Brazil and Argentina as deadline for China levies approaches (http://www.marketwatch.com/story/trump-brings-back-tariffs-on-brazil-and-argentina-as-deadline-for-china-levies-approaches-2019-12-02)
(http://www.marketwatch.com/story/trump-brings-back-tariffs-on-brazil-and-argentina-as-deadline-for-china-levies-approaches-2019-12-02)Check out: Steel Stocks Jump After Trump Adds Tariffs. Wall Street Is Still Cautious (http://www.marketwatch.com/articles/steel-stocks-rise-trump-tariffs-brazil-argentina-51575298984).
Commerce Secretary Wilbur Ross said Monday that President Trump is prepared to levy more duties (http://www.marketwatch.com/story/trump-said-ready-to-slap-more-tariffs-on-china-without-trade-deal-2019-12-02) on Chinese goods in the absence of a trade deal, as the clock ticks toward the Dec. 15 deadline for placing 15% tariffs on consumer good from China.
Meanwhile, China is insisting that U.S. tariffs be rolled back (http://www.marketwatch.com/story/china-insists-on-tariff-rollbacks-as-part-of-phase-one-trade-deal-report-2019-12-01) as part of any "phase one" trade deal, China's state-run Global Times said Sunday. And Axios reported Sunday that deal is unlikely to be agreed upon before late December (http://www.marketwatch.com/story/us-china-phase-one-trade-deal-expected-year-end-at-the-earliest-report-2019-12-01), but that Trump is expected to hit pause on additional tariff hikes to keep negotiations alive.
Read:Don't be so bullish, this economist says -- the trade news isn't that good (http://www.marketwatch.com/story/dont-be-so-bullish-this-economist-says-the-trade-news-isnt-that-good-2019-12-02)
U.S. stock indexes initially gained ground in premarket action Monday after data showed a pickup in manufacturing activity in China.
In other economic data, the government said construction spending fell 0.8% in October from a 0.3% decline in September. Economists were expecting a 0.4% increase, according to a MarketWatch poll.
Which stocks are in focus?
Dow component Intel Corp.'s (INTC) stock fell 0.6% Monday after it announced the completion of the sale of the majority of its smartphone modem business to Apple, a $1 billion deal announced July 25 (http://www.marketwatch.com/story/apple-looks-ahead-to-5g-with-purchase-of-intels-smartphone-modem-unit-2019-07-25).
Shares of Wells Fargo & Co. (WFC) dropped 1.5% Monday, after Raymond James analyst David Long cut his rating on the bank's stock (http://www.marketwatch.com/story/wells-fargos-stock-slips-after-raymond-james-downgrades-to-underperform-2019-12-02) from to underperform from market perform.
McDermott International Inc. (MDR) stock rallied 9.9%, after the energy-services company announced access to $350 million in financing (http://www.marketwatch.com/story/mcdermotts-stock-soars-after-announcing-forbearance-agreement-with-creditors-access-to-financing-2019-12-02) and a forbearance agreement with some of its creditors.
Amazon.com Inc. (AMZN) stock lost 1% as Cyber Monday got under way, one of the most important days of the year for the online retail giant.
See:Amazon pulls Auschwitz 'Christmas ornaments' after protest (http://www.marketwatch.com/story/amazon-pulls-auschwitz-christmas-ornaments-after-protest-2019-12-02)
Twinkie maker Hostess Brands(TWNK) stock gained 2.9% after the snack-food maker said it wanted to buy Voortman Cookies (http://www.marketwatch.com/story/hostess-to-buy-voortman-cookies-for-320-million-2019-12-02-691513) from Swander Pace Capital for $320 million (C$425 million) in cash.
Shares of Roku Inc. (ROKU) plunged 15% after Morgan Stanley analysts said stock of the TV-viewing platform looked too expensive (http://www.marketwatch.com/story/roku-stock-tanks-after-morgan-stanley-says-massive-rally-means-its-time-to-sell-2019-12-02) and likely was head into reverse as competition from other steaming services and apps heats up.
Shares of Apache Corp. (APA) sank 12% after the firm gave an update (http://www.marketwatch.com/story/apaches-stock-plunges-toward-18-year-low-after-update-on-well-status-disappoints-2019-12-02) on the status of a new offshore well, Maka Central #1, off the coast of Suriname, but provided no new information on site's potential profitability.
How are other markets trading?
The yield on the 10-year U.S. Treasury note rose 5.7 basis points to 1.835%, its biggest one-day yield gain since Nov. 7 (http://www.marketwatch.com/story/government-bond-yields-on-rise-as-global-manufacturing-shows-signs-of-life-2019-12-02), according to Dow Jones Market Data. (http://www.marketwatch.com/story/government-bond-yields-on-rise-as-global-manufacturing-shows-signs-of-life-2019-12-02)Yields and bond prices move in opposite directions.
In commodities markets, the price of West Texas Intermediate crude oil for January delivery rose 79 cents, or 1.4%, to settle at $55.96 a barrel on rising hopes for global growth (http://www.marketwatch.com/story/oil-boosted-by-china-data-as-traders-await-opec-meeting-2019-12-02). The price of an ounce of gold for December delivery fell $3.80, or 0.3%, to $1,468.80 as demand for havens waned (http://www.marketwatch.com/story/gold-gives-up-ground-after-upbeat-china-manufacturing-data-2019-12-02).
The U.S. dollar edged 0.4% lower, as measured by the ICE U.S. Dollar index , a gauge of the currency versus six major rivals.
In Asia, stocks closed mostly higher, with the China CSI 300 rising 0.1%, Japan's Nikkei 225 adding 1% and Hong Kong's Hang Seng Index gaining 0.4%. European stocks traded mostly lower (http://www.marketwatch.com/story/european-stocks-advance-on-strong-chinese-economic-data-2019-12-02), reflected by the 1.5% decline for the Stoxx Europe 600 .
-Joy Wiltermuth; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
December 02, 2019 16:33 ET (21:33 GMT)
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