Wall St rally ends on rising tariff fears

Friday, 31 August, 2018 - 06:46

US stocks have ended their four-day winning streak as risk reduction ahead of the long holiday weekend accelerated on growing trade anxieties.

The broad-based sell-off steepened in mid Thursday afternoon following a Bloomberg report that US President Donald Trump wants to impose proposed tariffs on an additional $US200 billion of Chinese imports as early as next week, sooner than expected.

The CBOE Volatility Index, a gauge of investor expectations for near-term volatility, rose to a near two-week high in a low-volume, pre-holiday session, closing at 13.53.

"When you have low volume, it's harder for the market to absorb strong buying or selling pressure," said Shawn Cruz, manager of trader strategy at TD Ameritrade in Jersey City, New Jersey.

"We still have (trade) headlines coming out on a daily basis," he said.

The Bloomberg report coincided with continuing efforts by Canada and the United States to revamp the North American Free Trade Agreement (NAFTA) ahead of a Friday deadline.

Apple shares closed at a record high, rising 0.9 per cent following news that it would unveil its latest iPhones on September 12.

Amazon stock rose 0.2 per cent, closing above $US2,000 for the first time and edging the company closer to becoming the second US company after Apple to reach $US1 trillion in market value.

The Dow Jones Industrial Average fell 137.65 points, or 0.53 per cent, to 25,986.92, the S&P 500 lost 12.91 points, or 0.44 per cent, to 2,901.13 and the Nasdaq Composite dropped 21.32 points, or 0.26 per cent, to 8,088.36.

Of the 11 major sectors of the S&P 500, only utilities advanced.

Campbell Soup Co shares dipped 2.1 per cent after it announced plans to sell its international and fresh refrigerated-foods units and left open the possibility of putting the whole company up for sale.

Shares of Abercrombie & Fitch plunged 17.2 per cent after the apparel retailer missed quarterly same-store sales estimates.

Discount retailers Dollar Tree and Dollar General were down 15.5 per cent and 1.0 per cent, respectively, after both gave disappointing profit outlooks on margin worries.

In economic news, the Federal Reserve's preferred inflation gauge, the core PCE price index, posted a 2 per cent year-on-year increase, hitting the central bank's target and boosting the likelihood of additional rate hikes this year.

Declining issues outnumbered advancing ones on the NYSE by a 1.84-to-1 ratio; on Nasdaq, a 1.36-to-1 ratio favoured decliners.

The S&P 500 posted 31 new 52-week highs and 1 new low; the Nasdaq Composite recorded 103 new highs and 39 new lows.

Volume on US exchanges was 5.99 billion shares, compared with the 6.09 billion average over the last 20 trading days.