A day after Wednesday’s dramatic rise, New York stock markets have reversed course, sinking lower amid uncertainty over trade and U.S. growth.
On Thursday morning, the Dow industrial index was down 340 points to 22,524, after gaining 1,000 points, or five per cent, the day before.
The broader S&P index fell 52 points to 2,415 and the Nasdaq was off 121 points at 6,432
The TSX index, which missed Wednesday’s rally because it was a holiday in Toronto, was rising on Thursday, up 205 points to 13,985.
The Canadian dollar fell nearly half a cent to 73.3 cents US. The loonie was weighed down by oil prices, which were continuing their slide.
The benchmark North American contract fell 84 cents to $45.37 US a barrel because of the world glut of oil.
Stocks have been falling for the last two weeks because of a muddled trade outlook and a perception that the U.S. bull run in stocks has reached its peak.
The U.S. Fed has hiked its key interest rate four times in the last year, which could put a squeeze on business investment, and it moderated its outlook for 2019, saying it foresees only two rate hikes ahead because U.S. economic growth will slow.
President Donald Trump helped heighten the uncertainty over the U.S. economy, lashing out at his central bank over raising rates and expressing a lack of faith in its leadership. Central banks are supposed to operate independently of political factors.
Then, early this week, Treasury Secretary Steven Mnuchin confused investors with a statement about U.S. bank liquidity, at a time when no one else was thinking there was any problem with banking health.
Complicating the picture are a tariff war between the U.S. and China, temporarily on hold, and a U.S. government shutdown, as Trump refused to pass a bill for government funding unless it included $5.7 billion for a wall on the Mexican border.
The mounting anxiety resulted in a five-day losing streak in New York. The Dow is now off nine per cent on the year, even after Wednesday’s gain.
The TSX never enjoyed the huge run-up seen in the U.S. and has been declining since September. It is down 13.6 per cent on the year, and trading at a level last seen in mid-2016.
from Update Trend News http://bit.ly/2LCebsx
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