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NEW YORK (Reuters) – A restless day on Wall Street ended on Tuesday with shares rising almost perfect after a massive and abrupt sell that had at one point wiped out more than 500 points of the Dow Jones industrial average.
Even with the late afternoon rally, equities have prolonged the recent series of market declines, giving the S & P 500 benchmark its fifth straight loss. Bond prices have risen, leading to lower yields as investors seek safer investments.
The Hang Seng Hong Kong index fell 3.1%. European markets also fell sharply.
The latest sell took place as investors were disturbed by the slowdown in economic growth in China and the growing signs that President Trump's aggressive trade policies were beginning to weigh on corporate earnings. Caterpillar and 3M collapsed Tuesday after companies warned of rising pricing costs.
"It's the story, it's not the results of the current quarter, but the comments, the impact of the rates and what it means in terms of costs," said Willie Delwiche, investment strategist at Baird. "If the rates did not come up in the results and comment appeals, then maybe you could say we're moving away, but the opposite is happening."
The S & P 500 lost 15.19 points, or 0.6%, to 2,740.69. The Dow lost 125.98 points, or 0.5%, to 25,191.43. The average had dropped by more than 540 points.
The Nasdaq slipped 31.09 points, or 0.4%, to 7,437.54. The Russell 2000 index of shares of smaller companies sold 12,521 points, or 0.8%, to 1,526.59. The index is now down for the year.
Markets have been shaken in recent weeks by growing concerns over the potential impact of rising interest rates, inflation and escalating trade disputes between states. And China on US companies.
Trump has imposed tariffs on about $ 250 billion of Chinese imports and Beijing has fought back by targeting $ 110 billion worth of US goods. Trump has threatened to tax another $ 267 billion worth of Chinese products, which would cover virtually everything China ships to the United States.
The two countries are grappling with a dispute over US allegations that China would steal US technology and force US companies to share trade secrets in exchange for access to the Chinese market.
Recent data show that China's economic engine is growing more slowly. From July to September, it grew by 6.5%, its slowest pace since the beginning of 2009. The world's second largest economy was slowing down, even before the start of a tariff war with Washington. This contrasts with the dynamics of the US economy. The government is expected to announce Friday that the US economy grew 3.3% in the third quarter, after rising 4.2% in the second quarter.
The strength of the economy contributed to earnings growth for the S & P 500 companies. These companies are expected to post 21.9% growth in earnings for the third quarter, but according to S & P Global Market Intelligence, investors are worried about future growth and uncertainty about trade.
Caterpillar slid 7.6% after the heavy equipment manufacturer warned that Trump's taxes on imported steel pushed up production costs.
3M lost 4.4% after its profits missed the Wall Street goals. The industrial manufacturer said it expects raw material prices to continue climbing and that tariffs would have a negative impact of about $ 100 million on the company's supply costs next year.
Caterpillar and 3M were by far the biggest drivers of this decline in the average of the 30 Dow companies.
Losses in banks, energy and technology companies offset the gains from Internet stocks and consumer goods. Strong sales in the Chinese and global markets set the stage for the volatile day on Wall Street.
Bond prices rose, bringing the yield of the 10-year Treasury note to 3.17%, against 3.19% Monday night.
Computer-based trading, which uses algorithms to guide purchases and sales, likely led to partial partial rebound at the end of the day, said Quincy Krosby, chief market strategist at Prudential Financial.
"On the downside and the upside, the algorithms will come into action and they really push the market in one direction or another," said Krosby.
A sharp drop in oil prices weighed on energy stocks on Tuesday. Marathon Oil fell 4.8%.
The Paccar truck manufacturer lost 5.1%, while the Cummins engine manufacturer lost 3.8%.
Communication values were among the biggest winners. Verizon Communications climbed 4.1%.
The traders also focused on McDonald's shares after the fast food chain reported third-quarter results higher than analysts' forecasts. The stock gained 6.3%.
Tesla was among the big winners on Tuesday. The stock rose 12.7% to $ 294.14, after Citron Research, a company that had been betting on the stock for years, had reversed its position by issuing a note saying it would a long-term investor in the company of electric vehicles and solar panels.
US crude fell 4.2% to $ 66.43 a barrel. Brent, used for the price of oil on the international market, lost 4.2% to $ 76.44 per barrel.
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