Stocks ended lower on Wall Street as tensions ratchet up again between the U.S. and China and more in Tuesday’s Stock Market Update.
The U.S. blacklisted a group of Chinese companies after claiming that their technology plays a role in the repression of China’s Muslim minority groups. The latest move casts more doubt on whether the world’s two largest economies will find a resolution to their long-running and economically damaging trade war. Envoys from the U.S. and China are preparing for another round of negotiations this week.
Technology companies and banks took the worst of the losses Tuesday.
Qualcomm, a chipmaker which relies heavily on sales to China, fell 4.5%. Bank of America gave back 2.4%.
Several medical device makers knocked down health care stocks. Thermo Fisher fell 5.9% and Boston Scientific slid 6.1%. Banks also dropped as bond yields fell. Bank of America shed 2.4%.
Safe-play sectors like utilities held up better. Bond prices rose. The yield on the 10-year Treasury fell to 1.53%.
STOCK MARKET UPDATE
KEEPING SCORE: The S&P 500 fell 45 points, or 1.6%, to 2,893. The Dow Jones Industrial Average lost 313 points, or 1.2%, to 26,164. The Nasdaq lost 132 points, or 1.7%, to 7,823.
Smaller company stocks took the brunt of the selling, sending the Russell 2000 index 1.6% lower.
Major stock indexes in Europe finished broadly lower after the British government warned that chances of a separation deal with the European Union are fading. The U.K. is on track to leave the 19-nation block on Oct. 31 but doesn’t yet have an agreement on trade in place.
ANALYST’S TAKE: Investors had to digest yet another surprise escalation in the U.S. trade war, adding another worry to a plate full of political and economic concerns.
“The jockeying for position in front of the Thursday and Friday meetings in Washington has intensified perhaps more than the market could have imagined,” said Julian Emanuel, chief equity and derivatives strategist at BTIG.
LOSING ITS SPARK: Energy stocks are having a rough year, and analysts expect the sector could be in for more pain when companies report third quarter results later this month.
Energy is the biggest loser among the S&P 500’s 11 sectors. It’s down 4.9% for the year so far and is the worst performing sector so far this month.
The stocks are likely to get hammered again when energy companies report their quarterly results. The sector is expected to report a nearly 10% drop in revenue for the third quarter due to a 19% decline in crude oil prices from a year ago, according to Credit Suisse analyst Jonathan Golub.
The analyst expects the sector to reduce earnings growth for the S&P 500 by 1.9% for the third quarter.
RISING DOUGH: Domino’s Pizza rose 4.6% as plans to buy back up to $1 billion in stock reversed the pizza chain’s earlier side. The stock initially fell after it reported surprisingly weak third quarter sales at established locations as it faces tougher competition.
RETAIL BRIGHT SPOT: Target rose 0.5% after the retailer said it was powering the relaunched web site of Toys R Us, which went live Tuesday.
CRUSHED CHIPS: Chipmakers tumbled after the U.S. blacklisted a group of Chinese tech companies that develop facial recognition and other artificial intelligence technology, saying the technology is being used to repress China’s Muslim minority groups. Ambarella fell 9.4% and Nvidia fell 3.8%.
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