U.S. stocks fell for a second day Thursday, with the Dow Jones Industrial Average down more than 400 points during the session, while U.S. Treasury yields fell to the lowest level since 2017 and crude oil prices saw their biggest one day fall this year, as investors began to adjust to the reality of a longer term standoff between the U.S. and China over trade policy.
Stocks in industries seen as most vulnerable to supply chain disruptions were hit hargest including semiconductors, automobiles and energy companies, as analysts calculated the impact of Trump's import tariffs and the ban on trade with some Chinese techology companies.
|I:DJI||DOW JONES AVERAGES||33821.3||-256.33||-0.75%|
|I:COMP||NASDAQ COMPOSITE INDEX||13786.268055||-128.50||-0.92%|
No trade talks have been scheduled since the last round ended on May 10, when President Donald Trump hiked tariffs on $200 billion worth of Chinese goods and took steps to impose more, prompting China to respond with levies of its own.
Treasury Secretary Steven Mnuchin told the House Financial Services Committee that there were no scheduled talks with high level officials in Beijing, but added that presidents Donald Trump and Xi Jinping likely would meet at next month's G-20. Mnuchin also suggested that a decision for further tariffs on China-made goods won't be made "for another 30 to 45 days," which overlaps with the late June summit in Japan.
“The prospect of a speedy conclusion to the current tensions between the U.S. and China continues to recede, and as such the caution of the last few days, runs the risk of turning into a full-blown retreat from those sectors that are likely to be hit the hardest, from further escalations,” said Michael Hewson, chief market analyst at CMC Markets, in a note to clients.
The potential resignation of U.K Prime Minister, Theresa May, over Brexit issues and the prospect of anti-EU populist parties doing well in Thursday EU elections also unnerved investors globally.
Weak U.S. economic data also contributed to negative sentiment. A reading of IHS Markit's manufacturing purchasing managers survey for May fell to a nine year low in April and and new home sales fell to an annual pace of 673,000 in April.
The U.S. 10-year yield fell to the lowest level since 2017 following the weaker-than-expected U.S. manufacturing data, with the 10-year rate dropping to 2.32 percent.
U.S. benchmark crude oil fell 5.4 percent to a low ot $58.13 a barrel, the lowest in over 10 weeks. Gold gained 1 percent to $1,286.42 an ounce. U.S crude oil Inventories rose by 4.7 million barrels last week to the highest level since mid-2017, according to the U.S. Energy Department, despite the U.S. sanctions on Iran oil exports.
|F||FORD MOTOR CO.||11.45||-0.63||-5.22%|
|XOM||EXXON MOBIL CORP.||55.29||-1.21||-2.14%|