U.S. stocks extended their losses into morning trading on Wednesday as investors headed for safer holdings amid worrying economic data and lingering trade disputes.
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Investors are still hunkering down following a dismal manufacturing report on Tuesday that sent the market to its sharpest loss in five weeks. The report increased fears that a trade war-induced slowdown in manufacturing will increasingly weigh on the broader economy and stunt growth.
Technology stocks were the biggest losers, led by declines from Microsoft and Apple. The sector has been extremely sensitive to shifts in economic forecasts and swings in the ongoing trade war between the U.S. and China.
Banks were also among the biggest losers as bond yields continued to slide. Citigroup fell 2% and Bank of America fell 1.9%. The yield on the 10-year Treasury fell to 1.61% from 1.64% late Tuesday. Lower bond yields force interest rates on loans lower, hurting banks.
Sinking bond yields are normally a sign that investors are shifting money into less-risky holdings because economic growth is in doubt. They also lean toward safe-play stocks, including utilities. That sector is holding up better than most with only slight losses.
Investors grappled with more worrisome economic data Wednesday as payroll processor ADP reported that hiring slowed more than expected in September. U.S. companies added 135,000 employees, marking a decline from the same period a year prior and falling short of forecasts.
The employment survey is another piece of potentially upsetting economic news this week. Investors are keeping a close watch on Friday’s employment report from the U.S. government, though economists are forecasting growth.
Other important economic indicators this week include Thursday’s service sector report. Services make up the bulk of the U.S. economy.
KEEPING SCORE: The S&P 500 index fell 1.3% as of 10:05 a.m. Eastern time. The Dow Jones Industrial Average fell 330 points, or 1.2%, to 26,242. The Nasdaq fell 1.4%.
OVERSEAS: Stocks in Europe and Asia fell broadly as the global prospects for economic growth dim amid trade uncertainty. A group of leading think tanks joined the German government in cutting the economic forecast for Europe’s largest economy.
The European Union is trying to avoid even more uncertainty and is urging President Donald Trump to hold off on additional tariffs in a dispute stemming from subsidies for airplane makers Airbus and Boeing. The World Trade Organization is set to make a ruling that could open the door for Trump to impose tariffs on European produce, which could lead to retaliation.
BUILDING PROFIT: Lennar rose 1.5% after the homebuilder soared beyond Wall Street’s third quarter profit forecasts on a healthy increase in home deliveries and revenue. The company also reported a solid increase in new home orders.
DIM RESULTS: Acuity Brands fell 14.9% after the lighting products maker reported weak profit and revenue during its fiscal fourth quarter. The company said it remains cautious on its forecast for 2020 because of the uncertainty around trade disputes and tariffs.