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NEW YORK – Stocks around the world are down on Tuesday as new signs indicate the global economy is weakening and talks between the US and China are struggling.
The International Monetary Fund lowered its economic forecasts for 2019 and 2020 and drew attention to risks, including trade tensions and rising interest rates. The Chinese government said its economy has grown in 2018 at the slowest pace since 1990. The Financial Times announced that the Trump government had canceled a proposal to meet with Chinese trade officials this week.
Technology companies slipped, as did industrial companies, which were penalized by the anticipated slowdown in growth as well as weak fourth quarter results. Bond prices have risen as investors seek safer investment, while oil prices have fallen as traders anticipate lower demand.
KEEP THE SCORE: The S & P 500 Index lost 47 points, or 1.8%, to 2,622 at 3:00 pm Eastern Time. The Dow Jones Industrial Average slid 408 points, or 1.7%, to 24,297. The Nasdaq Composite lost 163 points, or 2.3%, to 6,994. The Russell 2000 Stock Index of small size lost 29 points, or 2%, to 1,453.
Inventories in Europe and Asia also declined. Global markets have rallied over the past month as investors began to think that a slowdown in the global economy might not be as painful as they feared. Even with the decline on Tuesday, the S & P 500 is up 4.6% in 2019 and has jumped 11.5% since its last low on December 24th.
GLOBAL GROWTH: According to the IMF, the global economy will grow by 3.5% this year, compared with 3.7% previously. Executive Director Christine Lagarde said the global economy was growing slower than expected as risks increased. The bank reduced its growth estimate in 2020 from 3.7% to 3.6%.
Earlier in the day, China had announced a 6.6% growth in its economy in 2018.
According to the Financial Times, two officials were to visit the United States before meetings between US representatives and the most important Chinese trade representatives next week. But the meetings were canceled due to lack of progress on some crucial issues, which underscores how far the two parties are.
Technology and industrial companies have suffered some of the worst losses. Caterpillar's construction and mining equipment manufacturer sold 3.8% to $ 131.35 and the Deere farm equipment company lost 4.1% to $ 157.82. Among technology companies, chip makers have absorbed heavy losses. Nvidia dropped 5.8% to $ 147.90 and Texas Instruments lost 3.5% to $ 95.92.
QUOTE: "We started last year, in 2018, with a synchronized global recovery and we now have a global slowdown," said Quincy Krosby, chief market strategist at Prudential Financial. She said the reported difficulty in the trade talks "has shaken the confidence that the US and China are getting closer in the negotiation phase".
METAL MELTDOWN: The maker of Arconic aluminum products dropped 15.9% to $ 17.10 after announcing that he was considering more sales. Previously a member of aluminum giant Alcoa, Arconic said he has not received any offers likely to serve his interests. The stock has made sheaves in recent months following reports that the company was considering a sale.
Power tool maker Stanley Black and Decker fell 15.3% to 115.98 USD after its forecast for 2019 is below Wall Street estimates.
BONDS: Bond prices have gone up. The yield on the 10-year Treasury Note fell from 2.78% to 2.73%.
BUY IT NOW ?: eBay jumped 6.3% to 32.96 USD after activist investment firm Elliott Management announced a 4% stake in the online market and pushed it to make changes. The clbadified ads and the eBay StubHub ticket resale division are in trouble, and eBay should consider separating them from its activities in the market.
HOUSE OF HORRORS: Homebuilders sank after US home sales peaked in December and price growth fell to its lowest level in more than six years. The National Association of Realtors said Tuesday that sales of already built homes had dropped 6.4%. The years of rising prices and the more recent rise in mortgage rates have had an impact on sales, as has the limited number of homes available for sale.
Tri Pointe Group yielded 4% to $ 12.04 and Horton D.R. lost 2.3% to $ 36.34.
BREXIT PLAN: British Prime Minister Theresa May on Monday presented her Plan B for the British exit from the European Union, but it looks a lot like the original and it's not clear if she can get the approval of Parliament, which gave a resounding sound to his previous plan "no" last week. The European Union said it would not renegotiate the agreement already rejected by Parliament.
Britain must leave the European Union in just over two months. If Britain leaves without a commercial agreement, many companies, especially banks, could suffer.
ENERGY: The barrel of American oil has lost 2.3% to 52.57 dollars a barrel in New York. Brent, used for the price of international oil, fell 2% to 61.50 dollars a barrel in London.
Natural gas fell 12.7% to $ 3.04 per 1,000 cubic feet.
ABROAD: The UK FTSE 100 Index lost 1%. The German DAX and the French CAC 40 both lost 0.4%.
Japan's Nikkei 225 index fell 0.5% and the Kospi in South Korea sank 0.3%. Hang Seng Hong Kong lost 0.7%.
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Annabelle Liang contributed from Singapore.
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