US stocks have posted broad-based declines, led by tariff-sensitive industrial companies, as renewed worries over trade negotiations with China stoked global growth worries and kept investors away from risky assets.
Chinese Vice Premier Liu He will visit the US this week for trade talks, Beijing said on Tuesday, playing down a sharp increase in tensions after US President Donald Trump vowed to impose new tariffs.
Trump in a surprise move on Sunday said the higher levies would go into effect on Friday if a deal with China was not sealed, triggering a global sell-off in equities and inflaming fears of a slowdown in global growth.
Matt Forester, chief investment officer of BNY Mellon’s Lockwood Advisors in King of Prussia, Pennsylvania, said there was some uncertainty on what the ultimate result of the trade negotiations would be.
“If there is no deal that will be interpreted quite negatively by markets,” he said.
All the major S&P sectors were trading lower on Tuesday, with the industrial sector posting the steepest decline of 1.6 per cent.
Boeing, the single largest US exporter to China, slipped 1.8 per cent and Caterpillar declined 1.3 per cent. Boeing’s stock was also weighed by a report of a Barclays downgrade to “equal weight”.
Trade tensions also pressured oil prices, pushed US Treasury yields lower and halted a recent rally that propelled the S&P 500 and the Nasdaq to record highs.
Interest rate-sensitive banking stocks dropped 1.49 per cent and the broader financial sector fell 1.18 per cent.
Adding to growth worries, the European Commission revised down euro area growth forecasts and cut its already gloomy outlook on Italy.
At 9.53am local time the Dow Jones Industrial Average was down 284.00 points, or 1.07 per cent, at 26,154.48. The S&P 500 was down 32.81 points, or 1.12 per cent, at 2899.66 and the Nasdaq Composite was down 94.62 points, or 1.16 per cent, at 8028.67.
High growth companies including Microsoft, Apple, Amazon and Facebook fell more than 1 per cent and weighed on markets.
The earnings season has now reached its home stretch. Of the 392 S&P companies that have reported earnings so far, about 75 per cent have surpassed analysts’ estimates, according to Refinitiv data.
The upbeat reports have turned around earnings estimates for the first quarter to an almost 1 per cent rise, a huge improvement from the 2.3 per cent decline expected at the start of the earnings season.
American International Group jumped 7.7 per cent, the most among S&P companies, after the insurer reported a quarterly profit that blew past expectations.
Among decliners, Mylan NV tumbled 10.8 per cent after the drugmaker missed Wall Street estimates for quarterly revenue, hurt partly by manufacturing problems at its Morgantown plant in West Virginia.
Shares of Regeneron Pharmaceuticals fell 6 per cent after the drugmaker missed quarterly profit estimates.
Declining issues outnumbered advancers for a 4.31-to-1 ratio on the NYSE and for a 2.85-to-1 ratio on the Nasdaq.
The S&P index recorded four new 52-week highs and four new lows, while the Nasdaq recorded 29 new highs and 15 new lows.