U.S. stocks closed lower Tuesday, with the S&P 500 snapping its eight-day winning streak, on fears over escalation of trade tensions with the European Union and a weaker global outlook from the International Monetary Fund.
How did the benchmarks fare?
The Dow Jones Industrial Average DJIA, -0.72% dropped 190.44 points, or 0.7%, to close at 26,150.58, while the S&P 500 index SPX, -0.61% fell 17.57 points. or 0.6%, to 2,878.20. The Nasdaq Composite Index COMP, -0.56% declined 44.61 points, or 0.6%, to 7,909.28.
What drove the market?
The office of the U.S. Trade Representative threatened to levy tariffs on many European goods late Monday. The threat is a retaliation against European companies’ subsidies for aircraft manufacturer Airbus SE EADSY, -1.82% If the U.S. follows through, the proposed tariffs would affect about $11 billion in imports to the U.S., including helicopters, bicycles, cheese and wine.
Lighthizer said the Trump administration would wait for World Trade Organization clearance to implement the duties. President Donald Trump Tuesday morning tweeted that the EU has taken advantage of the U.S., adding that it would “soon stop!”:
The U.S.-EU tensions comes with the administration reportedly close to resolving a yearlong spat with China, which has roiled markets amid fears the clash between the world’s largest economies could disrupt global economic growth.
The IMF lowered the outlook for global economic growth in 2019 to 3.3% from 3.5% projected in January, marking its third reduction of growth expectations in six months. The decline has been broadly felt, with all advanced economies, including the U.S., and most major emerging-market economies seeing deterioration in their outlook.
Meanwhile, data pointed to a tightening of the U.S. labor market. The number of job openings in the U.S. fell by 538,000 to 7.1 million on the last business day of February, marking the smallest number of job openings since March of 2018.
The National Federation of Independent Business’s small-business optimism index edged up 0.1 point to a seasonally adjusted 101.8, marking the third month in a row in a narrow range.
What were strategists saying?
“The tariff threat is probably what’s moving markets negatively,” Karen Cavanaugh, senior market strategist with Voya Investment Management, told MarketWatch, though she noted that tariffs being discussed are relatively small. “We’re in an information vacuum before earnings season, and right now any little thing could move markets until we get something substantial to sink our teeth into.”
“Sentiment in continental Europe is holding up well, considering the heightened tensions between Washington, D.C., and Brussels in relation to the threat of $11 billion worth of tariffs being imposed on European imports,” wrote David Madden, market analyst at CMC Markets, in a research note.
Which stocks were in focus?
Apple Inc. AAPL, -0.30% surrendered early gains to fall 0.3%, bringing its nine-day win streak to a close as its effort to reclaim $1 trillion in market cap took a pause.
Shares of Wynn Resorts Ltd. WYNN, -3.86% dropped 3.9% after the company terminated talks to purchase Australia’s Crown Resorts.
Shares of Paris-listed Airbus SE AIR, -1.86% were off 1.9% amid the U.S. tariff threat. U.S. listed shares EADSY, -1.82% also fell 1.8%.
Avaya Holdings Corp. AVYA, +4.17% shares gained 4.2% after Bloomberg reported that the communications software company is organizing a sales process for the company, following the receipt of unsolicited bids.
General Electric Co. GE, -2.85% shares slid 2.9% a day after J.P. Morgan analyst Stephen Tusa downgraded the stock.
Shares of American Airlines Group Inc. AAL, -1.68% fell 1.7% after the company cut its first quarter guidance.
How were other markets trading?
Markets in Asia closed on a mixed note, with Japan’s Nikkei 225 NIK, -0.61%adding 0.2%, Hong Kong’s Hang Seng Index HSI, -0.35% rising 0.3%, while the Shanghai Composite Index SHCOMP, -0.39% lost 0.2%. European stocks were lower, with the Stoxx Europe 600 SXXP, -0.47% down 0.5%.
In commodities markets, the price of oil CLK9, +0.19% retreated from five-month highs, while gold futures GCM9, -0.13% settled higher. The U.S. dollarDXY, +0.02% was mostly unchanged.