Dow slumps 831 points amid Treasury yield spike, trade war angst

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A risk-off tone gripped financial markets, with the rise in Treasury yields and fresh concerns over the trade war with China sending the Dow tumbling to its worst day since February.

The gains in the blue-chip index happened the same day the Nasdaq 100 saw its biggest decline since September, their biggest divergence since the Internet bubble burst.
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The S&P 500 fell to a seven-week low, the Dow slumps 831 points, while the Nasdaq tumbled more than 4.08% in a broad selloff in U.S. equities. Boeing dropped 4.66% and Caterpillar dropped 3.84%, while computer companies dragged the broader measure to its longest slide since President Trump’s election win.

Fastenal added to angst that the trade war with China is raising materials costs that will crimp profit margins. Estee Lauder and Tiffany led losses after French luxury goods maker LVMH confirmed China is enforcing customs rules more strictly as trade tensions remain high. Oil fell from $75 a barrel even as a major hurricane headed for the Florida Panhandle.

“The biggest thing going on in markets is you’re seeing an unwind,” Sameer Samana, a global quantitative and technical strategist for Wells Fargo Investment Institute, said. “You had stocks doing really well, rates for the most part were very well-behaved. When you’ve got these risk-off moments, especially when you’re later in the cycle, there is some concern on the part of investors where it’s like, ‘Is this the beginning of the end?”’

Caution remains the key word across global markets as investors try to gauge whether the recent selloff has room to run. Valuations look more appealing, but the backdrop to trading is still dominated by deepening U.S.-China tensions and a surge in volatility for stock and bond markets. While the Treasury rout has eased, a glut of new U.S. debt is coming to the market this week. Following the producer price data are consumer figures, which land on Thursday and may determine where yields go from here.

Bloomberg News
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