U.S. stocks posted their worst one-day performance in weeks Tuesday, albeit finishing above session lows, building on the previous day’s decline after U.S. officials confirmed that tariffs on imported goods from China could be raised by the end of the week.
How did the benchmark indexes fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.05% fell 473.39 points, or 1.8%, to 25,965.09, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.36% dropped 48.42 points, or 1.7%, to 2,884.05. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.78% fell 159.53 points, or 2%, to 7,963.76.
At session lows, the Dow had fallen 648.77 points, or 2.5%, while the S&P 500 slid 69.82 points, or 2.4% and the Nasdaq was down 224.27 points, or 2.8%
The Dow suffered its largest percentage decline since Jan 3, while the S&P 500 and Nasdaq fell more in percentage terms than any day since March 22, according to FactSet.
What drove the markets?
U.S. stocks posted their worst daily losses in weeks Tuesday, following on less pronounced losses Monday, as investors grew concerned that the U.S.-China trade dispute would escalate by week’s end, after months in which market participants had predicted that both sides would soon come to an agreement to lower tariffs and create more certainty over U.S.-China trade rules.
U.S. Trade Representative Robert Lighthizer said Monday that the Trump administration will increase tariffs on $200 billion in Chinese goods early Friday. The prospect of higher tariffs had been first raised on Sunday by President Donald Trump, rattling investors who had anticipated that better progress toward a near-term resolution between the two superpowers.
In a briefing, Treasury Secretary Steven Mnuchin, along with Lighthizer, told reporters that the U.S. administration was made aware over the weekend that China was trying to back away from “some of the language” that had been hammered out in prior talks.
U.S. officials said that tariffs on those Chinese goods will rise from 10% to 25% at 12:01 a.m. Eastern time Friday, and markets will likely be monitoring China for further reaction.
The Wall Street Journal reported early Tuesday that China’s Commerce Ministry said on Tuesday that Vice Premier Liu He will visit Washington to continue trade talks on Thursday and Friday.
Chinese investors appeared to take the latest developments in stride, while buyers in so-called haven securities nudged the value of assets perceived as safe slightly higher.
During Tuesday trade, the Arms Index, a volume-weighted breadth measure of buying and selling on the NYSE and Nasdaq showed increased selling pressure, though not at panic levels. In afternoon trade Tuesday, the NYSE Arms rose to 1.532 from 1.34 on Monday and the Nasdaq Arms increased to 1.201 from 1.19, with a 2.000 level seen as indicating the level of panic selling that can be a contrarian indicator.
Which stocks were in focus?
Shares of Anadarko Petroleum Corp. could be in focus Tuesday, after the company said Monday evening that a $38 million bid by Occidental Petroleum Corp . /zigman2/quotes/207018272/composite OXY +4.75% was superior to a previously accepted by Chevron Corp . /zigman2/quotes/205871374/composite CVX +2.63% Stifel Nicolaus, downgraded Anadarko to hold from buy, while raising its price target to $7 from $68.