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| Stocks Head for Worst Day of 2019 as China Raises Trade Tensions With U.S. | Stocks Head for Worst Day of 2019 as China Raises Trade Tensions With U.S. |
| (32 minutes later) | |
| Stocks dropped for the sixth straight session on Monday, putting Wall Street on pace for its worst day of the year as China’s decision to let its currency sink against the dollar risked opening a new front in a trade war that is weighing on the world’s economy. | |
| The move was the latest escalation in the trade dispute between Washington and Beijing. Last week, President Trump pledged to impose tariffs on another $300 billion of imports from China, dashing hopes that a truce between the countries might be in reach. | The move was the latest escalation in the trade dispute between Washington and Beijing. Last week, President Trump pledged to impose tariffs on another $300 billion of imports from China, dashing hopes that a truce between the countries might be in reach. |
| “That has just totally disintegrated,” said Ryan Detrick, senior market strategist at LPL Financial. “Now China is just clearly firing back and that has people uncomfortable.” | “That has just totally disintegrated,” said Ryan Detrick, senior market strategist at LPL Financial. “Now China is just clearly firing back and that has people uncomfortable.” |
| The S&P 500 dropped more than 2 percent in early trading on Monday, with selling especially heavy in the trade-sensitive technology, consumer discretionary and industrial sectors, all of which dropped at least 2 percent. Semiconductor stocks fell more than 4 percent. | The S&P 500 dropped more than 2 percent in early trading on Monday, with selling especially heavy in the trade-sensitive technology, consumer discretionary and industrial sectors, all of which dropped at least 2 percent. Semiconductor stocks fell more than 4 percent. |
| The rout on Wall Street followed an overnight sell-off in Asian and European markets, after China’s tightly controlled currency, the renminbi, dipped more than 1 percent against the dollar and crossed the psychologically important barrier of 7 per dollar. | The rout on Wall Street followed an overnight sell-off in Asian and European markets, after China’s tightly controlled currency, the renminbi, dipped more than 1 percent against the dollar and crossed the psychologically important barrier of 7 per dollar. |
| A move of that magnitude is considered quite large in the currency markets. But it was especially notable for the renminbi, which China has kept from crossing 7 for more than a decade. Beijing’s decision to let it fall was widely viewed as a signal that China was girding for a protracted battle over trade, technology and economic hegemony with the United States. | |
| [Why the number 7 makes China’s currency a trade weapon.] | [Why the number 7 makes China’s currency a trade weapon.] |
| The People’s Bank of China, in a bluntly worded statement on Monday, tied the currency’s dip to Mr. Trump’s “unilateralism and trade protectionism measures and the imposition of increased tariffs on China.” | The People’s Bank of China, in a bluntly worded statement on Monday, tied the currency’s dip to Mr. Trump’s “unilateralism and trade protectionism measures and the imposition of increased tariffs on China.” |
| The continuing trade battle between the world’s two largest economies has slowed the global economy. And investors are acutely worried that it could begin to weigh on the less trade-dependent American domestic economy, which is experiencing its longest-ever expansion. | The continuing trade battle between the world’s two largest economies has slowed the global economy. And investors are acutely worried that it could begin to weigh on the less trade-dependent American domestic economy, which is experiencing its longest-ever expansion. |
| Unemployment remains at a 50-year low in the United States, but there are reasons for concern. The pace of both economic and job growth have slowed in recent months. Business investment has been negative. On Monday, a key gauge of the services sector’s strength fell to its lowest level since late 2016. | Unemployment remains at a 50-year low in the United States, but there are reasons for concern. The pace of both economic and job growth have slowed in recent months. Business investment has been negative. On Monday, a key gauge of the services sector’s strength fell to its lowest level since late 2016. |
| Signs of economic softness have pushed investors to buy up government bonds, raising prices and driving yields, which move in the opposite direction, down sharply this year. On Monday, the yield on the 10-year Treasury note hovered near 1.77 percent. If it were to end the day there, it would be the lowest yield on the benchmark government bond this year. | Signs of economic softness have pushed investors to buy up government bonds, raising prices and driving yields, which move in the opposite direction, down sharply this year. On Monday, the yield on the 10-year Treasury note hovered near 1.77 percent. If it were to end the day there, it would be the lowest yield on the benchmark government bond this year. |
| The market declines on Monday undercut hopes for a quick rebound from the selling of last week — the S&P 500’s worst of the year. The poor performance came even as the Federal Reserve delivered a widely expected decision to cut its key monetary policy target rate by a quarter of a percentage point. | The market declines on Monday undercut hopes for a quick rebound from the selling of last week — the S&P 500’s worst of the year. The poor performance came even as the Federal Reserve delivered a widely expected decision to cut its key monetary policy target rate by a quarter of a percentage point. |
| The tone struck by Jerome H. Powell, the Fed chair, at a news conference after the decision, however, appeared to underwhelm investors, who wanted to hear that policymakers were ready to continue cutting rates in the coming months. Mr. Powell’s description of the cut as a “mid-cycle adjustment to policy” suggested to some people that the central bank viewed rate cuts as temporary and tactical, rather than the start of a longer-term push. | The tone struck by Jerome H. Powell, the Fed chair, at a news conference after the decision, however, appeared to underwhelm investors, who wanted to hear that policymakers were ready to continue cutting rates in the coming months. Mr. Powell’s description of the cut as a “mid-cycle adjustment to policy” suggested to some people that the central bank viewed rate cuts as temporary and tactical, rather than the start of a longer-term push. |
| “You’ve got trade policy escalating; you’ve got Fed policy uncertainty,” said Dan Clifton, a partner at Strategas Research Partners, a financial and economic consulting firm, adding that the market was “basically de-risking until you get clarity on really either one of those issues.” | “You’ve got trade policy escalating; you’ve got Fed policy uncertainty,” said Dan Clifton, a partner at Strategas Research Partners, a financial and economic consulting firm, adding that the market was “basically de-risking until you get clarity on really either one of those issues.” |