Dow and S&P 500 snap three-day winning streak as tariffs weigh on global economy
New York(CNN Business) The Dow and the broader stock market closed sharply lower on Tuesday. Investor sentiment soured after US and Chinese tariffs went into effect over the weekend, and economic data pointed at further weakness in manufacturing.
Intensifying concerns about Brexit and the tumult it could bring to the UK and European economies didn't help.
US stocks finished lower across the board, after spending all day in the red. The Dow and the S&P 500 snapped a three-day winning streak.
The Dow (INDU) closed down 1.1%, or 285 points. At its weakest point Tuesday, the index was down more than 400 points. The S&P 500 (SPX) finished 0.7% lower and the Nasdaq Composite (COMP) fell 1.1%.
The Institute of Supply Management's manufacturing index for August came in at 49.1 — its lowest level since January 2016, and worse than the 51 number that economists had expected. A level below 50 indicates that activity at America's factories contracted. August marked the first time in three years that the manufacturing sector shrank.
Earlier on Tuesday, the less-closely watched manufacturing purchasing managers' index for August came in at 50.3, slightly better than expected.
Manufacturing in the United States has been hurting because of the trade war and a global economic slowdown. So far, however, the American consumer has kept the economy humming.
Global uncertainty
On Sunday, the United States imposed a 15% tariff on $110 billion worth of Chinese imports, while Beijing retaliated with 5% to 10% levies on $75 billion of American imports.
China meanwhile filed a complaint against the United States with the World Trade Organization, according to multiple news reports.
This latest round of US tariffs also hit Chinese-made consumer products, including apparel and electronics. The United States delayed the implementation of about half of these consumer goods tariffs until December 15, aiming not to disrupt holiday shopping too much.
One way or another, American consumers' worries about the trade war are beginning to crop up in economic data and will be a closely watching part of the data going forward.
Safe haven assets are rallying amid the uncertainty. Gold prices settled 1.8% higher at $1,545.90 an ounce, and the 10-year US Treasury bond yield dropped to its lowest level since July 2016, according to Refinitiv. Yields and prices move opposite to each other.
European bourses finished lower across the board as the future of Brexit is growing more uncertain and a general election could be looming. It would be the third UK election in four years.
The UK's Conservative Party lost its working majority Tuesday, after a member of parliament defected to the Liberal Democrats. The British pound slumped to its weakest level in three years in response. The UK's FTSE 100 (UKX) closed down 0.2%.
