U.S. stocks closed lower Tuesday, after President Trump criticized China in a United Nations speech, undermining investor sentiment that had been improving on hopes for successful trade talks in October.
Equities extended their losses after U.S. House Speaker Nancy Pelosi, when asked about launching impeachment proceedings against the president, said she would make an announcement later Tuesday after meeting with Democratic Party leadership and House committee chairman.
How did the major benchmarks fare?
The Dow Jones Industrial Average DJIA, -0.53% fell 141.81 points, or 0.5%, to 26,806.18 while the benchmark S&P 500 index SPX, -0.84% declined 25.16 points, or 0.8%, at 2,966.62. The Nasdaq Composite index COMP, -1.46% retreated 118.84 points, or 1.5%, to 7,993.63.
At session highs Tuesday morning, the Dow was up 129.69, or 0.4%, the S&P had risen 16.27 points, or 0.5% and the Nasdaq was up as many as 46.37 points, or 0.6%
At session lows the Dow fell 245.03 points, or 0.9%, the S&P 34.04 points or 1.1% and the Nasdaq had lost 117.26 or 1.8%.
What drove the market?
Equities turned sharply lower after it appeared the chances that the House of Representatives pursuing an impeachment inquiry against President Trump were on the rise. When asked about impeachment, Pelosi told NBC news, “Later today I will make an announcement after I meet with my chairmen, my leadership and my caucus.” Subsequent reports indicated that the Speaker will announce her support for a formal inquiry Tuesday after the market close.
Mid-afternoon President Trump said he had authorized a declassified transcript of a phone call with the Ukrainian president, after which stocks clawed back some of their losses.
Calls for taking action against the president have risen during the past week, after reports alleged the president used the threat of withholding economic aid to Ukraine to pressure officials in Kiev to produce information damaging to Democratic presidential candidate Joe Biden, whose son Hunter Biden has had business dealings in Ukraine.
“I think [the impeachment news] is driving this,” said Willie Delwiche, equity strategist at R.W. Baird told MarketWatch. “It doesn’t need to be a commentary on impeachment specifically, but it just creates more uncertainty,” for a market that is already facing an uncertain future on trade relations with China and a 2020 election that is quickly approaching, he added.
To be sure, If the House of Representatives votes to impeach the president, that would not necessarily result in his removal from office, which would require a vote of two-thirds of the U.S. Senate, now controlled by Republicans. When Bill Clinton was impeached by the House in 1998, but acquitted in the Senate, the event had little effect on markets.
Markets were already trending lower after Trump accused China of manipulating its currency and stealing intellectual property in a U.N. speech to world leaders only weeks before U.S. – China trade talks. Earlier global equity markets were buoyed by modest optimism around the trade talks U.S. Treasury Secretary Steven Mnuchin late Monday told Fox Business Network that the deputy-level negotiations between the two countries had made some progress.
Early morning gains indicated that “the market wants to move forward, but investors need to see something to get enthused about,” said Karyn Cavanaugh, senior market strategist at Voya Investment Management, in an interview. “Trump’s speech at the U.N. wasn’t conciliatory at all. There was hope we’d get positive trade news this week but as the day continued you’ve had disappointments that have crept in.”
Weak U.S. and global economic data is also weighing on investor sentiment.
In U.S. economic data, the September U.S. Conference Board’s consumer confidence index slipped to 125.1, a three month low, from 133.3, as escalating trade tensions with China undermined confidence, underscoring the dangers of a conflict that has harmed key business sectors such as manufacturing and farming and poses a threat to a record U.S. economic expansion.
”Consumer confidence plunged in September which counts as a big surprise that may sidetrack the economic expansion that is relying on consumer spending to fuel growth,” wrote Chris Rupkey, chief financial economist for MUFG. “This unwelcome news on souring consumer spirits is a startling new development that could even bring more rate cuts later this year from the Federal Reserve.”
The U.S. S&P Case Shiller home-price index for July rose 2% year-on-hear in July, the slowest pace of home price apprecation since 2012.
Which stocks were in focus?
WeWork founder and Chief Executive Adam Naumann is reportedly stepping down from that role, after the parent company The We Co. WE, +0.00% was forced to delay an initial public offering earlier this month.
Netflix Inc. NFLX, -4.26% stock fell 4.3% on analysts’ concern about earnings, given the competition from Disney and other streaming video platforms.
Alphabet Inc. GOOGL, -1.33% GOOG, -1.24% subsidiary Google won a European court fight over tougher “right to be forgotten” rules. Europe’s top court ruled that Google does not have to remove links to sensitive personal data worldwide, as demanded by French authorities.
Starbucks SBUX, -0.98% won an appeal against a European Union demand to pay up to $33 million in back taxes to the Netherlands, though the stock closed 1% lower on the day.
Facebook FB, -2.97% announced the acquisition of start-up CTRL-labs for an undisclosed amount. CTRL-labs explores ways for people to communicate using brain signals. Shares fell 3% Tuesday.
Shares of BlackBerry Ltd. BB, -22.64% fell 22.6% after posting weaker-than-expected numbers for its fiscal second quarter.
How did other markets trade?
U.S. Treasury yields fell on Tuesday after a consumer confidence indicator sagged, suggesting the bedrock of the U.S. expansion may be developing cracks under the pressure of global growth worries and continuing trade tensions. The 10-year Treasury note yield TMUBMUSD10Y, +0.10% slumped 7.2 basis points to 1.632%, marking its biggest daily drop in a month.
Gold prices logged their highest finish in nearly three weeks Tuesday, after President Donald Trump criticized China and took a hard-line stance on Iran during his speech at the United Nations General Assembly, pressuring U.S. stocks and boosting the metal’s haven appeal. Gold for December delivery GCZ19, -0.23% on Comex rose 0.6% to settle at $1,540.20 an ounce, while December silver SIZ19, -0.26% declined 0.4%, to $18.63 an ounce.
Oil futures settled lower Tuesday, pressured by signs that Saudi Arabia is making progress in restoring production following attacks on processing facilities, as well as concerns over the global demand picture. West Texas Intermediate crude for November delivery CLX19, -0.52% , the U.S. benchmark, fell 2.3% to settle at $57.29 a barrel. November Brent BRNX19, -0.49% the global benchmark, fell $1.67, or 2.6%, to $63.10 a barrel on ICE Futures Europe.
In Asia overnight Tuesday, the China CSI 300 000300, -0.42% was little changed around 3,901 while Japan’s NIK, -0.50% Nikkei 225 index was also steady at 22,098. European stocks were little changed, according to the Stoxx Europe 600 index SXXP, +0.01%.