Stock-index futures pointed to a lower start for Wall Street on Wednesday as worries about trade tensions and the outlook for global growth weighed on equity markets and sparked continued buying interest in government bonds.
Futures on the Dow Jones Industrial Average YMM19, -0.77% fell 196 points, or 0.8%, to 25,173, while the S&P 500 futures ESM19, -0.68% were off 18.35 points, or 0.7%, to 2,786.50. Nasdaq-100 futures NQM19, -0.88% lost 62.25 points, or 0.9%, to 7,233.25.
What’s driving the market?
A decline would extend the weakness seen Tuesday, when the Dow DJIA, -0.93% fell 237.92 points, or 0.9%, to end at 25,347.77, while the S&P 500 SPX, -0.84% gave up 23.67 points, or 0.8%, to end at 2,802.39. The Nasdaq Composite COMP, -0.39% shed 29.66 points, or 0.4%, to 7,607.35.
U.S.-China trade tensions remained a factor, analysts said, after Chinese state media reports underlined the country’s scope to use rare-earth minerals, used in the production of everyday devices, such as mobile phones, computer memory chips and rechargeable batteries, as an economic weapon.
See: Shares of Chinese Australian rare-earth companies soar amid China threat over exports
An official with China’s National Development and Reform Commission was quoted by state media as saying that “if anyone wants to use imported rare earths against China, the Chinese people won’t agree. The editor in chief of China’s Global Times newspaper tweeted that the country was considering “restricting rare earth exports” to the U.S.
Meanwhile, global bonds continue to rally, pulling down yields. The spread between the 10-year Treasury note TMUBMUSD10Y, -1.74% and the 3-month Treasury bill TMUBMUSD03M, +0.32% moved further into negative territory, dropping to its lowest since 2007. Such inversions of that measure of the yield curve are viewed as reliable recession indicator.
Which stocks are in focus?
Shares of Capri Holdings Ltd. CPRI, -0.26% fell 6.8% in premarket trade Wednesday, after the parent of Michael Kors and Versace said that fiscal fourth-quarter profits fell from the year ago period, while issuing downbeat guidance.
DowDuPont Inc. DWDP, -1.00% shares could be in focus, after the materials and chemicals company said Wednesday that it expects to book noncash goodwill impairment charges of $800 million to $1.3 billion, following the 2017 merger of The Dow Chemical Company and E.I. du Pont de Nemours. The stock fell 0.8% before the bell Wednesday.
Shares of Dick’s Sporting Goods Inc. DKS, -2.37% rose 4.5% in premarket action Wednesday, after the retailer topped first-quarter profit estimates, while raising guidance for the rest of the year.
Abercrombie & Fitch Co. ANF, +1.63% stock tumbled 17.2% in premarket action, after the apparel retailer reported same-store sales growth that missed expectations, while issuing weak guidance for the second quarter and full-year 2019.
What are analysts saying?
“Risk aversion has been on the rise as investors grow increasingly concerned over the impact that the ongoing trade dispute is having on the global economy,” said Jasper Lawler, head of research at London Capital Group, in a note. “Weakening macro data is heightening these concerns fueling fears of a global recession. An unresolved Brexit and rising tensions between Rome and the European Commission are adding to the gloomier outlook.”
How are other markets trading?
Stock markets in Asia closed mostly lower Wednesday, with Japan’s Nikkei 225 NIK, -1.21% falling 1.2%, Hong Kong’s Hang Seng Index HSI, -0.57% losing 0.6% and China’s Shanghai Composite Index SHCOMP, +0.16% inching 0.2% higher. In Europe, stocks were trading markedly lower, as illustrated by the Stoxx Europe 600 index SXXP, -1.54% .
In commodities markets, crude oil CLN19, -3.13% tumbled 2.6% to $57.55 per barrel, while gold prices GCM19, +0.50% advanced. The U.S. dollar DXY, +0.05% meanwhile, edged higher against its rivals.
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