Wall Street stocks gone down by more than 1 percent on Thursday. There are concerns that the United States and China would not be able to settle on a trade deal intensified, further questioning the global economic growth.
It is reported that President Donald Trump and Chinese President Xi Jinping may not meet by the early March deadline set by the two countries for sealing a deal.
White House adviser Larry Kudlow told a news network that there was a “pretty sizable distance” between the countries and are set to resume discussions in Beijing next week.
Mike Loewengart, vice-president of investment strategy at E*Trade Financial in New York has also mentioned that any concern that the stalemate would not be overcome by China and the U.S would create negative sentiment for the markets as trade is the single largest overhang,
Among the S&P 500’s major sectors, only utilities and real estate indexes looked positive while illustrating Thursday’s risk-off sentiment.
The Philadelphia SE Semiconductor Index fell 2.7 percent. Chipmakers (semiconductor industry is the aggregate collection of companies engaged in the design and fabrication semi conductor devices) get a large chunk of their revenue from Chinese customers.
Wall Street is on a rough patch after the European Commission slashed its euro zone growth forecasts for 2019 and 2020 due to an predicted slowdown in the largest countries of the bloc, partly due to trade tensions.
Disappointing financial forecasts from several U.S. companies, including Twitter Inc, have also given investors pause.
More than half of S&P 500 companies have reported fourth-quarter results, with about 71 percent beating profit estimates, according to IBES data from Refinitiv. However, current-quarter earnings growth estimates have shrunk to 0.1 percent from 5.3 percent at the start of the year.
The Dow Jones Industrial Average fell 285.26 points, or 1.12 percent, to 25,105.04, the S&P 500 lost 34.55 points, or 1.26 percent, to 2,697.06 and the Nasdaq Composite dropped 105.41 points, or 1.43 percent, to 7,269.87.
Energy stocks fell 2.3 percent, the largest percentage drop among S&P 500 sectors, as crude prices dropped because of higher demand as a result of trade tensions.
Twitter shares fell 9.6 percent after the social media company forecasted that revenue in the first quarter would be weaker than expected and that its full-year operating costs would rise.
SunTrust Banks Inc shares rose 8.8 percent after the bank agreed to be bought for about $28 billion in stock by fellow regional lender BB&T Corp, whose shares rose 2.6 percent.
The prospects of further deals let to gains in other regional banks, but a drop in the large Wall Street lenders led to declines in the S&P 500 banks and financials indexes.
Declining issues outnumbered advancing ones on the NYSE by a 2.74-to-1 ratio; on Nasdaq, a 2.37-to-1 ratio favored decliners.
The S&P 500 had 11 new 52-week highs and two new lows; the Nasdaq Composite recorded 29 new highs and 27 new lows.
