Stocks experienced the worst trading session of 2019 on Monday as escalating trade tensions between the U.S. and China renewed fears of a global economic slowdown. The perceived “risk-off” tone prompted the Dow to slide 767 points. The S&P 500 retreated 3.0%, leaving the benchmark 6% below its July 26th record high. The Nasdaq Composite tumbled 3.5% for its sixth consecutive decline.
Following intervention from the central government, the Chinese Yuan tumbled to the lowest level since 2008, leading to President Trump calling the depreciation a “currency manipulation.” Further, Chinese officials have reportedly asked state-owned companies to halt imports of U.S. agricultural goods in response to the White House’s tariff announcement last week. Elsewhere, a report showed ISM’s July gauge of U.S. service sector activity fell to the weakest level since August 2016. Amid the uncertainty, the CBOE Volatility Index (VIX) surged more than 30% and perceived “safe-haven” assets rallied. The yield on the benchmark 10-year Treasury note tumbled 12 basis points to 1.73%, the lowest level since October 2016. COMEX gold added 1.0% to $1,460.00/ounce, near a six-year high.
All 11 S&P 500 sectors finished in negative territory, with nine groups falling at least 2%. Weakness in chipmakers inspired a 4% drop in Technology shares, while lower Treasury yields weighed on Financials. Energy stocks also underperformed as WTI crude lost 1.4% to $54.86/barrel. Meanwhile, the oft-cited FAANG stocks tumbled 3.8% with Apple’s slide of 5.2% leading the retreat. In earnings, Berkshire Hathaway Class B shares lost 2.4% after the conglomerate missed analyst profit expectations.