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2 December 2019

Major US stock indexes finished trading in the red

Major US stock indices fell markedly as investors analyzed disappointing ISM manufacturing index data and the latest trading news.

A report by the Institute for Supply Management (ISM) showed that business activity in the US manufacturing sector unexpectedly declined in November. According to the report, the ISM manufacturing activity index last month was 48.1 points compared with 48.3 points in October. The index was expected to rise to 49.2 points. Recall that a value below 50 points indicates a decrease in activity.

The mood also overshadowed the statements of US President Trump that China still wants to conclude a trade deal, “but we will see what happens.” In addition, US Secretary of Commerce Wilbur Ross said in an interview with Fox Business that negotiations with China can be described as “one step forward, one step back”, and added that if the parties do not reach an agreement by December 15, then new tariffs on the Chinese products will take effect. These comments appeared after the Chinese publication Global Times said on Sunday that Beijing wants US tariffs to be canceled as part of the first phase of the deal.

Thus, there are no clear signals yet when both countries will be able to sign a trade agreement, and last week new friction was noted between Washington and Beijing after U.S. President Donald Trump signed the law to support protesters in Hong Kong.

The head of the White House also said on Monday that he would resume tariffs on metal imports from Brazil and Argentina. Trump wrote on Twitter: “Brazil and Argentina are actively devaluing their national currencies, which is bad for our farmers. In this regard, I immediately reintroduce tariffs on steel and aluminum coming to us from these countries. ”He also called on the Fed to reduce the stock, saying:“ The Federal Reserve should do the same in order to stop many countries from taking advantage of the benefits strong US dollar. Fed, cut rates and soften politics! ”

Most of the DOW components completed trading in the red (22 of 30). The outsider turned out to be the shares of The Boeing Company (BA; -2.58%). The biggest gainers were Exxon Mobil Corp. (XOM; + 0.66%).

Almost all S&P sectors recorded a decline. Only the real estate sector grew (+ 1.6%). The largest decline was shown in the industrial goods sector (-1.2%).

At the time of closing:

Dow 27,799.92 -251.49 -0.90%

S&P 500 3,114.66  -26.32 -0.84%

Nasdaq 100 8,572.07 -93.40 -1.08%

Market Focus
  • German factory orders unexpectedly fell in October
  • BOJ's Harada says no need to take additional policy steps
  • Eurozone construction activity continues to grow in November
  • Eurozone GDP up by 0.2% during the third quarter, as expected

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