U.S. stock indexes staggered to nasty losses near midday Monday, as China retaliated against President Trump’s tariff increases. Losses were broadly based, but two sectors featured some winners: gold miners and utilities.
The Nasdaq dived 3.2%, while the S&P 500 and the Dow Jones Industrial Average lopped off 2.4% and 2.3%, respectively. Small caps in the Russell 2000 sagged 2.8%.
Volume in the stock market today was tracking higher than Friday’s levels on both major exchanges.
Distribution In U.S. Stock Indexes
The sharp selling in heavy volume points toward institutional selling. While Trump and Chinese leader Xi Jinping showed no willingness to compromise, Wall Street can’t be sure how far the negativity will extend. Some market watchers now see a U.S. recession and even deeper weakness in China’s economy as possibilities.
China May Target Farm Products, U.S. Treasuries
After Trump’s tariff increases Friday on $200 billion in Chinese goods, China said Monday that it would slap tariffs on $60 billion in U.S. goods, effective June 1. China reportedly is considering additional measures, such as a halt to purchases of U.S. agricultural products and a dumping of U.S. Treasuries.
The 10-year Treasury yield fell to 2.39% Monday, down 7 basis points, according to Bloomberg data.
Utilities, Gold Miners Hang Tough
Meanwhile, American Electric Power (AEP) advanced 1% in brisk volume. The Ohio-based utility has formed a flat base with a potential buy point at 86.20. AEP was trading over 85 in morning action. The dividend yield is 3.2%.
Southern Company (SO) has been rolling higher since early 2019. The Atlanta-based utility advanced 0.7% Monday morning in strong volume. Southern’s dividend yield is 4.6%.
Gold miners showing strength included Kirkland Lake Gold (KL), up 3% in above average volume; and Franco Nevada (FNV), up 2% in heavy volume. The iShares Gold Trust (IAU), an exchange traded fund that reflects the price of gold bullion, gapped up 0.8% as it retook its 50-day moving average line.
U.S. crude oil futures rose 0.26 to 61.92 after reports of sabotage to four oil tankers off the coast of United Arab Emirates.
Exchange Traded Funds
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