U.S. stocks fell Tuesday morning, though off session lows, amid the threat of a fresh escalation of tensions on tariffs with the European Union, threatening to snap an eight-day winning streak for the S&P 500.
How are benchmarks performing?
The Dow Jones Industrial Average DJIA, -0.58% was off 170 points, or 0.7%, at 26,170, while the S&P 500 index SPX, -0.42% fell 13 points. or 0.5%, at 2,883. The Nasdaq Composite Index COMP, -0.18% slipped by 11 points, or 0.2%, at 7,942.
What’s driving the market?
A fresh clash in international trade is being digested by investors in early morning action, after 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, -1.93% 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”:
Fresh tensions in international trade comes as Trump’s administration was reportedly close to resolving a yearlong spat with China, which has roiled markets because such a clash between the world’s largest economies could disrupt global economic growth, market participants have said.
Meanwhile, U.K. Prime Minister Theresa May was set to travel to meet German Chancellor Angela Merkel and French President Emmanuel Macron to discuss the prospect of a longer delay to the country’s planned divorce from the European Union.
Separately, the International Monetary Fund cut the outlook for growth in 2019 to 3.3% from estimates of 3.5% in January and 3.7% in October, marking its third reduction of growth expectations in six months. The decline has been broadly felt, with all major advanced economies, including the U.S., and most major emerging-market economies seeing deterioration in their outlook.
Read: Brexit Brief: May on a Merkel and Macron mission
What are strategists saying?
“The tariff threat is probably what’s moving markets negatively this morning,” 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 DC 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 Tuesday research note.
Which data are in focus?
The number of job openings in the U.S. fell by 538,000 to 7.1 million on the last business day of February, the Labor Department said, marking the smallest number of job openings since March of 2018.
Before that report, a reading of small-business optimism was little changed in March, according to a survey released Tuesday. The National Federation of Independent Business reported its small-business optimism index edged up 0.1 points to a seasonally adjusted 101.8, marking the third month in a row in a narrow range.
Which stocks are in focus?
Shares of Wynn Resorts Ltd. WYNN, -3.17% are in focus after the company terminated its talks to purchase Australia’s Crown Resorts, soon after confirming that it was in negotiations. The stock fell 3.6% early Tuesday.
Shares of Paris-listed Airbus SE AIR, -1.79% were off 1.9% amid the U.S. tariff threat. U.S. listed shares EADSY, -1.93% fell 1.7% Tuesday morning.
Avaya Holdings Corp. AVYA, +3.38% stock was in focus, after Bloomberg reported (paywall) Thursday evening that the communications software company is organizing a sales process for the company, following the receipt of unsolicited bids. Shares rose 3.2%
General Electric Co. GE, -3.11% stock remained under pressure Tuesday, one day after J.P. Morgan analyst Stephen Tusa downgraded the stock. Shares in the industrial conglomerate fell 5.1% Monday, and were down 2.7% Tuesday morning.
Shares of American Airlines Group Inc. AAL, -2.51% fell 2.7% after the company cut its first quarter guidance.
How did the benchmarks trade yesterday?
On Monday, the Dow, dropped 83.97 points, or 0.3%, to 26,341.02, the S&P 500 rose 3.03 points, or 0.1%, to 2,895.77, tying its longest winning streak from October 2017. The tech-oriented Nasdaq Composite Index gained 15.19 points, or 0.2%, to 7,953.88.
How are other markets trading?
Markets in Asia closed on a mixed note, with Japan’s Nikkei 225 NIK, +0.19% adding 0.2%, Hong Kong’s Hang Seng Index HSI, +0.27% rising 0.3%, while the Shanghai Composite Index SHCOMP, -0.16% lost 0.2%. European stocks were slightly lower, with the Stoxx Europe 600 SXXP, -0.45% down 0.4%.
In commodities markets, the price of oil CLK9, -0.67% was edging lower, while gold futures of GCM9, +0.49% climbed. The U.S. dollar DXY, -0.08% meanwhile, ticked lower.
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