FYI: Stocks, bond yields and oil prices dropped after President Trump said that the U.S. will impose additional tariffs on China next month, highlighting how trade worries continue to rattle investors.
The Dow Jones Industrial Average erased a rebound of more than 300 points, oil dropped 7.9%—posting its worst day since February 2015—and the yield on the benchmark 10-year U.S. Treasury note plumbed fresh 2019 lows. The blue-chip index dropped 280 points, or 1.05%, to 26583. The S&P 500 fell 0.90% and the technology-heavy Nasdaq Composite slid 0.79%.
President Trump said Thursday the U.S. would impose an additional 10% tariff on $300 billion in Chinese imports beginning Sept. 1, reviving investor concerns over trade tensions between the world’s two biggest economies.
The latest round of U.S.-China trade talks concluded Wednesday without any compromise, though both sides described the talks as constructive. The next round will be held in September.
Stocks were lower on the day after rebounding earlier in the session, as traders had grown more confident that the Federal Reserve would cut rates again in September. Federal-funds futures showed the market was pricing in a 70% chance of another quarter-point rate cut in September. That is up from around 49% on Wednesday, according to CME Group.
Energy shares in the S&P 500 led the broader market lower Thursday, with the sector shedding 2.6%. The losses came as U.S. crude prices dropped 7.9% to $53.95, their worst one-day percentage drop since February 2015.
Shares of U.S. oil producers slid, with Whiting Petroleum and Concho Resources tumbling 38% and 23%, respectively.
U.S. government-bond yields have erased almost all of their rise following the 2016 presidential election when investors bet that massive tax cuts and infrastructure spending would stimulate growth and inflation. The benchmark 10-year Treasury yield has fallen more than 1 percentage point since peaking at a multiyear high of about 3.2% in November.
The WSJ Dollar Index, which measures the currency against a basket of its peers, was down 0.2%.
Investors are looking ahead to Friday’s employment report for signs that the U.S. economy remains on solid footing amid concerns over trade tensions and slowing global growth. Economists surveyed by The Wall Street Journal estimate U.S. employers added 165,000 jobs in July while the unemployment rate is projected to tick down to 3.6%.
Data released Thursday showed U.S. factory activity lost momentum in July. The Institute for Supply Management said its manufacturing index fell to 51.2 in July from 51.7 in June, the fourth consecutive month of slowing expansion. Readings above 50 indicate activity is expanding across the manufacturing sector, while those below 50 are a sign of contraction.
Elsewhere, the Stoxx Europe 600 rose 0.5%. The British pound was down 0.1% against the dollar, hovering near historic lows after the Bank of England left interest rates unchanged.
In Asia, both China’s benchmark Shanghai Composite Index and Hong Kong’s Hang Seng fell 0.8%.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-07-30/your-evening-briefingMarketWatch:
https://www.marketwatch.com/story/stock-futures-bounce-after-fed-disappointment-sparks-selloff-2019-08-01/printWSJ:
https://www.wsj.com/articles/global-stocks-waver-on-fed-policy-outlook-11564647018Bloomberg:
https://www.bloomberg.com/news/articles/2019-07-31/asia-stocks-set-to-track-u-s-sell-off-after-fed-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/the-big-picture/stock-market-trump-tariffs-bears/CNBC:
https://www.cnbc.com/2019/08/01/stock-market-fed-cools-expectations-of-further-rate-cuts.htmlReuters:
https://www.reuters.com/article/us-usa-stocks/wall-st-bounces-back-on-tech-strength-focus-shifts-to-earnings-idUSKCN1UR4JAU.K:
https://uk.reuters.com/article/uk-britain-stocks/shell-fed-stance-weigh-on-ftse-100-boe-action-hurts-mid-caps-idUKKCN1UR3T9Europe:
https://www.reuters.com/article/us-europe-stocks/bat-and-financials-lift-european-stocks-after-fed-blow-idUSKCN1UR3T7Asia:
https://www.cnbc.com/2019/08/01/asia-stocks-china-data-south-korea-currencies-in-focus.htmlBonds:
https://www.cnbc.com/2019/08/01/us-treasury-yields-higher-after-fed-dampens-hopes-of-more-rate-cuts.htmlCurrencies:
https://www.cnbc.com/2019/08/01/forex-markets-federal-reserve-powell-comments-usd-eur-jpy-in-focus.htmlOil:
https://www.cnbc.com/2019/08/01/oil-markets-us-federal-reserve-in-focus.htmlGold:
https://www.cnbc.com/2019/08/01/gold-markets-federal-reserve-dollar-in-focus.htmlWSJ: Markets At A Glance:
https://markets.wsj.com/usMajor ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitorSPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-trackerSPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectorsCurrent Futures:
https://finviz.com/futures.ashx 
Comments
. 10 Year Gov't Yield Yield 1.89%
. Spot Gold $1443.15 (+ 2.07%)
. GDX-Gold Miners Index 27.85 (+ 5.09%)
. Crude Oil $54.51 (-6.95%)
(Source: Bloomberg)
- Huge one-day drop in crude, possibly indicative of slowing global economy. Bloomberg says it’s the biggest one-day drop since 2015.
- Complete reversal for the miners, erasing all of yesterday’s steep losses - plus some.
- And what can you say about a now “whopping” 1.89% APR for those wishing to lock-up their money for 10 years in a Treasury bond?
I hope none of the above infringes too much on Ted’s corner. I know a lot happened in equities as well. But it’s these less followed sectors that caught my attention. What does it all mean? Who the #%@* knows?