US Stock Market Overview – Stocks Drop as Tariff Threat Stokes Global Growth Fears

The EU and US are considering levying huge tariffs
David Becker

US stocks were lower on Tuesday, as the S&P 500 index snapped an 8-day winning streak. For the session the Dow Industrials was the worst performer closing 0.72%, followed by the S&P 500 and the Nasdaq. Most sectors were lower, led down by energy and industrials. Utilities bucked the trend. Stocks were little changed ahead of the open, but news that the EU was fighting back after Trump announced an 11-billion tariff shook the markets.

Higher Oil Prices Buoy Aramco Bond Deal

Higher crude oil prices have assisted in the capital raise by Saudi Aramco who was able to garner $12 billion in its debut international bond sale on Tuesday, according to the Wall Street Journal.  The state-owned Aramco received more than $100 billion in orders for its bond and had been expected to raise about $10 billion from the sale. Saudi officials are likely to view the large investor interest as a positive bellwether for the oil giant’s potential initial public offering not expected for another 2-years.

Crude oil prices made a higher high on Tuesday ahead of the API inventory numbers scheduled to be released after the close on Tuesday. Trader’s also await the Energy Information Administration’s inventory report which is scheduled for Wednesday.

Wages Gains Continue

In a sign of rising wages, Bank of American announced that hourly wages will hit $20 per hour by 2021. Hourly wage changes will go into effect May 1, when the bank increases its minimum wage to $17 an hour. Bank of America increased its minimum wage to $15 an hour two years ago.

Trade Tariff Treats Escalate

The EU retaliated from a US proposal to target European goods with tariffs, following a World Trade Organization decision over subsidies for Airbus. Trade tensions between the EU and US are escalating. On Monday the US said it’s considering $11 billion worth of retaliatory tariffs on a range of goods in response to illegal subsidies the EU granted to Airbus. The WTO ruled last year that these allowances had caused harm to the US.

The Fed and Growth

With the next fed meeting nearly 3-weeks away, Fed speakers will be out and about discussing the White Houses desire to reduce interest rates. The Fed has said that it would reduce its rollover of bonds in May, but President Trump wants the Fed to begin earlier. The White House is concerned that tight rates will keep the economy subdued into the 2020 elections. Stocks were weighed on by news from the IMG that global growth would only rise 0.2% in 2019.

Wal-Mart Adds Robots to Stores

Wal-Mart announced on Tuesday that the company was increasing the use of robots in stores to count inventory, clean and unload trucks. Wal-Mart said that at least 300 stores this year will add machines that scan shelves for out-of-stock products.

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