Dow Jones industrial average suffers steep drop at open amid trade fears, oil price worries


U.S. stocks suffered a steep drop at the start of trading Thursday as jittery investors react to the arrest of a top Chinese tech executive and monitor a key OPEC meeting amid a continuing swoon in oil prices.

Investors hoping for stability after the Dow Jones Industrial Average's nearly 800-point fall on Tuesday, instead saw the blue chip average in early trading retreat another 500 points, or 2 percent, and give up its gains for the year.

The sell-off, which began earlier this week amid a signal from the bond market that a possible economic slowdown is coming and rising skepticism about the outcome of this past weekend's trade war cease-fire between the U.S. and China, looks set to continue. The expected slide on Wall Street follows weakness overseas, where stocks slid 2.5 percent in Europe, 2 percent in Japan, and fell 2.5 percent in Hong Kong.

The arrest of Meng Wanzhou, the chief financial officer and founder's daughter at Huawei, China's largest telecommunications equipment maker, has raised fears that it will harm the tentative trade truce between the world's two largest economies.

"Traders have quickly moved out of riskier assets reflecting nerves that the arrest is likely to escalate tensions between the U.S. and China once again," Jasper Lawler, head of research at London Capital Group, told USA TODAY via email.

More: China promises prompt tariff cease-fire with Washington

More: Lyft launches IPO process with confidential SEC filing

More: Social Security calling? Nope, it's just scammers out to grab your cash

Wall Street is closely watching an OPEC oil meeting today, where the cartel is considering a cut in daily production to help stabilize oil prices, which have fallen sharply in recent weeks. The size and timing of the cut will likely determine if the agreement is enough to stem the fall in crude prices.

U.S.-produced crude was down 3 percent Tuesday at $51.38 per barrel, about one-third lower than its recent high of $76 per barrel in early October. Lower oil prices hurts the earnings of U.S. energy companies, which drags their stock prices down.

U.S. financial markets reopen today after shuttering Wednesday for the funeral services of late U.S. President George. H.W. Bush.

The ongoing trade dispute worries again caused Dow stocks with big exposure to China to fall sharply early Thursday. Apple shares fell 2.5 percent to a six-month low of $172.34, while heavy-equipment maker Caterpillar was down nearly 3 percent and airplane maker Boeing 3.5 percent lower.

Tuesday's swift, steep price drop caught Wall Street off guard. It followed a six-day rally of more than 1,500 points for the Dow that was driven by a speech by Federal Reserve chief Jerome Powell that suggested the central bank would slow its interest rate hikes next year, as well as initial optimism over the U.S.-Sino trade truce.

But those good vibes quickly evaporated. Tuesday's selloff was the "first hint of a 'sell what you can' type market," said Chris Verrone of New York research firm Strategas Research Partners. The firm's clients, he added, have been asking whether Tuesday's big downdraft signaled investor "capitulation."

Normally, markets don't put in lows until there's a large spike in fear and all the investors who want to get out do so.

For now, Verrone isn't sure the selling has been exhausted.

"Deeper oversold conditions are often needed, and more convincing (rallies), are necessary to flip the tone of the (market)," he noted in a report. "For us, this remains a day by day assessment."

Market volatility and wild price swings have returned with a vengeance to Wall Street this year. The broad Standard & Poor's 500 stock index has moved up or down more than 2 percent on 14 trading days this year, the most in seven years, according data from S&P Dow Jones Indices.

"The failed rally isn't a good sign heading into the rest of the year," the U.S. Investment Policy Committee at CFRA, a Wall Street research firm, concluded in a report.

This article originally appeared on USA TODAY: Dow Jones industrial average suffers steep drop at open amid trade fears, oil price worries


More Related News

Amid trade talks, China urges U.S. to respect its right to develop, prosper
Amid trade talks, China urges U.S. to respect its right to develop, prosper

The United States should respect China's right to develop and become prosperous, the Chinese government's top diplomat told a visiting U.S. delegation, reiterating that the country's doors to the outside world would open wider. The United States has accused China of unfair trade practices, including forced technology transfers, charges it has denied. Respect and cooperation are the correct choice for both countries, something the international community hopes to see, State Councillor Wang Yi told the delegation of U.S. business leaders and former officials in Beijing on Tuesday.

Oil near 2019 highs amid OPEC supply cuts, but rising U.S. output weighs
Oil near 2019 highs amid OPEC supply cuts, but rising U.S. output weighs

U.S. West Texas Intermediate (WTI) crude oil futures were at $55.93 per barrel at 0042 GMT, down 16 cents from their last settlement, but not far off their 2019 high of $56.33 reached earlier this week. International Brent crude futures had yet to trade. Prices have been driven up by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).

NASA captures best look yet at China
NASA captures best look yet at China's lunar lander hanging out on the Moon

China started the year off strong by landing a lunar probe on the Moon's surface and deploying a tiny rover to do a bit of exploring. The country's space agency is the first to land such machines on the far side of the Moon that we Earthlings never get to see with our own eyes.NASA recently published images captured from the Lunar Reconnaissance Orbiter showing the lander as a tiny pale dot against a sea of gray. It was a cool shot, but now we have an even better one, and it shows both the lander and rover doing their thing on the dusty surface of the Moon.This new image was captured back on February 1st as the LRO was passing over the landing site of the Chang'e 4 spacecraft. The photo...

The Sky Is Blue for Emerging-Market Stocks, JPMorgan Says
The Sky Is Blue for Emerging-Market Stocks, JPMorgan Says

"We anticipate that China will do everything it can to resolve trade tensions with the U.S., " wrote Richard Titherington, JPMorgan Asset's chief investment officer for emerging-market and Asia Pacific equities, saying that dwindling capex, consumer confidence and retail spending have given Beijing a

China plans to tap the Sun
China plans to tap the Sun's boundless energy with an orbiting solar farm

Our Sun is the most readily available source of energy we have available to us, but harnessing its incredible power is something humanity is still a challenge. Solar farms placed in sunny areas of the Earth do a good job of converting sunlight into usable energy, but major drawbacks remain.For one, solar panels placed on the planet can only collect sunlight for a portion of the day, and weather can dramatically hinder their ability to create electricity. Now, China thinks it has a solution to both of those problems, and it's going to test its idea within the next few years.In a new report from China's Science and Technology Daily, as spotted by the Sydney Morning Herald, the country's...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Latin America

Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.