With it becoming increasingly obvious that the resolution of the trade war will not be coming anytime soon, the Dow once again went into a nosedive losing some 450 points before recovering the last hour to close down 286.  The other day the defensive stocks did poorly when it appeared the market was coming back.  Today the defensive sectors were the only real winners with the trade-related sectors tanking and investors moving to safe havens.  Also adding to the down mood was manufacturing data showing new orders falling for the first time in ten years.  May has been characterized by selling pressure triggered by the tit-for-tat tariffs and the downward pressure is seen continuing until the China situation is resolved. The pressure was intense enough today that for once volume was above average at 7.6 billion. 

thu  MAY 23, 2019 / 4:34 pm 

Trade tensions slam Wall St. as global growth worries mount

April Joyner

DJ:  25,490.47  -286.14        NAS:  7,628.28  -122.56         S&P:  2,822.24  -34.03      5/23

NEW YORK (Reuters) - U.S. stocks slumped on Thursday as investors dumped shares of companies in growth and cyclical sectors, with energy and technology leading declines, on fears that the escalating U.S.-China trade war would stymie global economic growth.  Further fueling trade fears among investors, Beijing said that Washington needs to correct its “wrong actions” for trade talks to continue after the United States blacklisted Huawei Technology Co Ltd last week.

Among S&P 500 sectors, only utilities and real estate, both considered defensive areas, registered gains as investors moved to safe-haven assets such as Treasuries. Stocks pared losses in the last hour of trading, but Wall Street’s major indexes all ended more than 1% lower.  “It looks less and less like there will be a near-term resolution to the trade war, and the market is obviously spooked on that,” said Lamar Villere, partner and portfolio manager at Villere & Co in New Orleans.  Shares of S&P 500 technology and industrial companies, two sectors that have been bellwethers of trade sentiment, fell 1.7% and 1.6%, respectively. Shares of S&P 500 companies in the cyclical financial and energy sectors also tumbled, with the 3.1% drop in energy shares leading losses among S&P 500 sectors.  A 5% plunge in oil prices in response to a dampened outlook for demand impeded energy shares, while a drop in 10-year Treasury yields, which hit their lowest level since October 2017, held back financial shares.

Adding to the downbeat mood in markets, data from IHS Markit showed U.S. manufacturing faltered in May, with new orders falling for the first time since August 2009.  “We’re going to see a drift lower until there’s a resolution of what’s happening with China,” said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia. “If you’re trading, it’s not a bad idea to put yourself on the sidelines and sit it out.”

The Dow Jones Industrial Average fell 286.14 points, or 1.11%, to 25,490.47, the S&P 500 lost 34.03 points, or 1.19%, to 2,822.24 and the Nasdaq Composite dropped 122.56 points, or 1.58%, to 7,628.28.  Stocks succumbed to selling pressure in May after Washington and Beijing engaged in tit-for-tat tariffs and other retaliatory measures, with the S&P 500 on track to post its first monthly decline since the December sell-off.

Shares of NetApp Inc tumbled 8.1%, the biggest percentage drop on the S&P 500, after the data storage equipment maker forecast current-quarter profit and revenue below Wall Street estimates. L Brands Inc shares jumped 12.8% after the owner of Victoria’s Secret and Bath & Body Works reported better-than-expected quarterly earnings.

Declining issues outnumbered advancing ones on the NYSE by a 3.26-to-1 ratio; on Nasdaq, a 3.84-to-1 ratio favored decliners.  The S&P 500 posted 28 new 52-week highs and 27 new lows; the Nasdaq Composite recorded 22 new highs and 189 new lows.

Volume on U.S. exchanges was 7.61 billion shares, compared to the 6.99 billion-share average for the full session over the last 20 trading days.