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US shares crash in worst performance since Trump win

Last updated: 16:19 21 Mar 2017 EDT, First published: 05:19 21 Mar 2017 EDT

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  •  - US shares have worst day since election

  •  - Trumps's pro-growth policies come under pressure

  • - Financial stocks hammered

US stocks took a severe battering on Tuesday as optimism over Trump's economic plans showed signs of unwinding.

The benchmark Dow Jones Industrial Index and the Nasdaq registered their worst daily drops since September as financial stocks crumbled.

The former index (Dow) tanked 237 points to 20,668, while the latter lost 107 points to 5,793.

The S&P 500 declined the most in one session in five months.

Ken Odeluga, the analyst at London based City Index, said storm cloud’s "gathering over President Donald Trump’s legislative agenda" had trigged the sell-off - the worst since October.

The declines showed "a clear rotation out of shares widely cast as beneficiaries of Trump’s legislative intentions", he said.

He suggested the main triggers included the FBI’s unprecedented confirmation that it’s investigating possible collusion between Trump’s election campaign and Russia.

"Large industrials and bank stocks are among the biggest losers. Bank of America was the biggest faller in the benchmark for much of Tuesday’s session, leading a tumbling financial sector after it surged 20% higher between the beginning of November and the end of 2016.

Bank stocks had sailed on the coat tails of benchmark US borrowing costs. But in step with the greenback, the yield unwind that began with the Fed’s rate hike last week accelerated on Tuesday, sending US 10-year Treasury yields to their weakest rate since the beginning of the month.., he added.

The stock slide also comes as Trump's backed health care bill ran into trouble in Congress, which raised some questions about his plans for faster economic growth

Odeluga suggested a sell-off of this kind has been in the works for some months. Momentum readings for major U.S. equity gauges have been sounding alarm bells as early as November.

Elsewhere, food companies fell after General Mills Inc (NYSE:GIS) reported its seventh straight quarterly sales decline, hurt by weak demand for its yogurt and baking products, as the company discounted less in a competitive pricing environment in the US.

Shares dipped 50 cents to $59.76, and Kellogg shed 1.8% to $73.60.

 

 

MID-SESSION

US shares were tanking at midsession as global markets took a pounding amid a lack of much corporate news.

There was a sea change in the mood compared to early deals, where stocks made some gains and Wall Street is on track for its worst performing session this year as financial stocks took a big hit.

The Trump rally really does seem to have now run out of steam.

Connor Campbell at UK based spreadbetter Spreadex said: "The Dow hasn’t been able to justify its current highs since Donald Trump sent the index there a few weeks ago, and may be suffering from a lack of news."

Financials and industrial shares lead the decline in the US and the Dow Jones is down almost 200 points at the time of writing to 20,707, the S&P500 shed over 24 to 2,349 and the Nasdaq composite index fell 87 points to 5,813.

Bank of America Corp (NYSE: BAC) bombed 5.67%, while KeyCorp (NYSE: KEY) shed 6.08% to $16.98. Investment banking giant Goldman Sachs (NYSE:GS) fell 3.1%.

Transdigm Group Inc (NYSE:TDG) plummeted 8.36% to $218.05

Duke Energy Corp (NYSE:DUK) was, however, a notable gainer - adding 2.11% to $82.89.

In London, higher than expected inflation figures took the wind out of the FTSE 100's sails, which closed 51 points lower.

OPEN

US shares fell at the open, bucking futures trading, as the dollar sank as traders continued to shun risk.

The S&P500 is on course for its fourth straight day of losses and fell 18 points at 2,355. The Dow Jones Industrial Index also dropped 157 points at 20,748.

The tech heavy Nasdaq lost 63 to stand at 5,837.

Europe’s' main indices were also down with FTSE100 dropping over 44 to 7,384 and the DAX down 69 points. The CA4 40 also lost three to 5,008.

As with yesterday, financials were in the doldrums. Bank of America Corp (NYSE:BAC) fell  2.5% while Fifth Third Bancorp  (NYSE:FITB) shed over 4%.

Tech stocks however  were doing better. Facebook Inc (NASDAQ: FB)  gained ground as did Apple Inc (NASDAQ:AAPL).

A notable gainer was Pain Therapeutics Inc  (NYSE: PTIE), which added over 52% as it  announced securing positive regulatory guidance from the U.S. Food And Drug Administration (FDA) for its lead drug candidate Remoxy ER.

PREVIEW

Wall Street shares are set to buck the downward trend and open higher as the oil price firmed and traders look to further earnings reports.

The main benchmarks closed flat to lower on Monday as investors were reluctant to take on risk in an uncertain global climate.

Big UK news yesterday was that a date was named for the Brexit negotiations to be triggered and therefore the UK's departure from the EU, which sent sterling weaker against the US dollar.

On Wall Street, the Dow Jones  Industrial Index finished almost nine points lower or 0.04% to 20,905, but today Dow  futures are up 15 points.

The broader based S&P 500 on Monday shed 0.2%, or almost five points to finish at 2,373 but today is seen around four points higher.

The Nasdaq Composite index had hit an intra-day high yesterday but fell back to close just 0.01% up at 5,901.  Nasdaq futures on Tuesday are up 11.5 points.

As the FBI continues to investigate possible links between Trump's associates and Russia during last year's election, the focus for some today will be the airline and travel sector after new rules from Washington preventing laptops and tablets and other devices  during flights from eight countries in the Middle East and Africa.

US crude - West Texas Intermediate - is up on the day, adding 0.62% to stand at US$48.52 A barrel, while gold is down 0.66% at US$2,232 per ounce.

On the earnings agenda today, before the bell, we have results from giant food company General Mills (NYSE: GIS) and BMW (ETR: BMW, NYSE: BMWYY).

FedEx (NYSE: FDX) and Nike (NYSE: NKE) will release earnings after the close.

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