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Wall Street ends day with heavy losses as Navarro's comments fail to trigger a late recovery

  • Escalating trade threats weigh on market sentiment.
  • VIX adds over 25% on Monday.
  • Nasdaq Composite erases more than 2%.

Major equity indexes in the United States started the day under pressure and extended their losses as the latest political developments from the U.S. escalated concerns over a long-lasting trade dispute between the United States and the rest of the world.

A report published in the Wall Street Journal over the weekend claimed that the Treasury Department was planning to prevent firms with at least a 25% Chinese ownership from investing in American technology firms. Responding to that report, Treasury Secretary Steven Mnuchin stated that this decision would not be specific to China but would "apply to all the countries that were looking to steal their technology."

Although White House economic advisor Peter Navarro said that there were no immediate plans on investment restrictions, these comments failed to trigger a meaningful recovery in the last hour of the session.

"There's only a couple of things that can derail a 3.5-, 4-percent growth economy. The combination of interest rates and trade wars are at the top of the list," Oliver Pursche, chief market strategist at Bruderman Asset Management in New York, told Reuters.

Also speaking earlier today, the U.S. Energy Secretary Risk Perry said that they were going to do everything they can to keep gasoline prices reasonable, forcing the crude oil rally to come to an end and the barrel of West Texas Intermediate to slide back to the $68 area. The S&P 500 Energy Index (SPNY) ended the day 2.2% lower while the S&P 500 Information Index (SPLRCT) lost 2.3%.

The Dow Jones Industrial Average closed the day below its 200-day-moving-average for the first time in two years at 24,250.59 as it lost 328.09 points or 1.33%. The S&P 500 recorded its largest one-day drop in nearly two months to close at 2,717.07, down 37.81 points, or 1.37%. The tech-heavy Nasdaq Composite erased 160.81 points, or 2.09%, to 7,532.01.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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