NEW YORK, Aug 5 — Wall Street’s main indexes fell sharply today, led by technology companies, as China’s willingness to let the yuan slide in response to the latest US tariff threat fanned fears that it could further aggravate an ongoing trade war.
China let the yuan breach the key 7-per-dollar level for the first time in more than a decade today, and President Donald Trump slammed it as “a major violation”.
Trump stunned financial markets last week by threatening to impose 10 per cent tariffs on the remaining US$300 billion (RM1.2 trillion) of Chinese imports, abruptly abandoning a brief ceasefire.
“Trade continues to trend in the wrong direction. As in retaliation for new tariffs, China let the yuan move to a 10-year low versus the US dollar,” said Ryan Detrick, senior market strategist for LPL Financial in Charlotte, North Carolina.
“Any hopes of a quick resolution with China are fading quickly.”
On Friday, the benchmark S&P 500 and the Nasdaq suffered their worst weekly performance of 2019, in a week that also saw the US Federal Reserve’s cut interest rates for the first time in a decade.
At 9.50am ET, the Dow Jones Industrial Average was down 505.65 points, or 1.91 per cent, at 25,979.36, the S&P 500 was down 59.19 points, or 2.02 per cent, at 2,872.86.
The Nasdaq Composite was down 213.46 points, or 2.67 per cent, at 7,790.61.
All of the 11 major S&P sector were in the red. The S&P technology sector, heavily exposed by its chipmakers and other global technology players to Chinese markets, dropped 3.2 per cent.
Apple Inc slid 4.1 per cent as analysts expected the newly proposed tariffs to hurt demand for its flagship iPhone, while the Philadelphia chip index slipped 3.5 per cent.
Industrial bellwethers Boeing Co and Caterpillar Inc shed more than 2 per cent.
Signals from the bond market were also daunting as the inversion of the yield curve between the three-month Treasury bill and 10-year bonds grew to the widest since April 2007.
Interest-rate sensitive banks dropped 3 per cent.
The CBOE Volatility index, a gauge of investor anxiety, rose to its highest level in about three months at 21.71 points.
The rest of the high-flying FAANG group also lost ground. Facebook Inc, Amazon.com Inc, Netflix Inc and Google-parent Alphabet Inc were down between 2.3 per cent and 2.7 per cent.
More than three quarters of S&P 500 companies have reported results so far, with about 74 per cent topping analysts’ expectations for profit, according to Refinitiv IBES data.
No.1 US meat processor Tyson Foods Inc rose 4.7 per cent after beating quarterly profit estimates.
Declining issues outnumbered advancers for a 7.11-to-1 ratio on the NYSE and for a 7.20-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 19 new lows, while the Nasdaq recorded six new highs and 153 new lows. — Reuters
