ibusinesslines.com
ibusinesslines.com October 21, 2018


Wall Street drops on concerns over US-China trade woes, rising inflation

16 May 2018, 09:02 | Kelvin Horton

Daily June E-mini S&P 500 Index

E-mini S&P 500 Index

Stocks closed lower Tuesday, breaking an eight-day winning streak for the Dow Jones industrial average.

The Dow Jones industrial average gained 68 points, or 0.3 percent, to 24,899.

KEEPING SCORE: The S&P 500 index fell 25 points, or 1 percent, to 2,704 as of 3:30 p.m. The Nasdaq composite dropped 78 points, or 1.1 percent, to 7,332.

A surge in US government bond yields to their highest level in nearly seven years sent Wall Street shares sliding on Tuesday after strong retail sales data stoked inflation concerns and investors fretted about looming trade talks between the United States and China.

That paves the way for higher borrowing costs on mortgages.

The probability that the US central bank will raise its benchmark rate a fourth time this year went above 50 percent for the first time, according to the CME's FedWatch tracking tool for the fed funds futures market. A move in the yield above 2.9 percent earlier this year triggered a correction for US equities.

Treasury yields surged higher after April retail sales came in as expected with a 0.3% month-over-month increase, but the March increase was revised higher to 0.8% from 0.6%, and core retail sales jumped 0.4%. The Dow is on track for a gain of 2.2 percent, while the S&P 500 is closing in on a gain of 2.4 percent.

It also put investors in the mood to sell their shares in homebuilders.


The yield curve steepened from near its flattest levels since 2007, with the spread between the 2 year and 10 year bond yields widening 5bps to 50bps.

Technology and health care sector companies took some of the worst losses. Chip maker Nvidia fell 3.8 percent; drug maker Celgene slid 3.9 percent. Brent crude, used to price worldwide oil, added 20 cents to $78.43 in London.

The Russell 2000 is up 64.83 points, or 4.2 percent.

CURRENCIES: The dollar rose to 110.38 yen from 109.66 yen late Monday.

In other energy futures trading, heating oil was little changed at $2.25 a gallon.

Major indexes in Europe finished mixed Tuesday.

The Dow is down 12.81 points, or 0.1 percent. France's CAC 40 inched up 0.2 percent. Australia's S&P/ASX 200 lost 0.6 percent.



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