Dow drops 200 points as US-China trade and falling 10-year yield unnerve investors
U.S .. shares fell Tuesday when investors reassessed the importance of an agreement reached by the US and China to expel new tariffs and then marketed a flattering yield curve in US sovereign debt.
How are the goals far?
Dow Jones Industrial Average
DJIA, -0.77%
fell 200 points, or 0.8% to 25.618 while the S & P 500 index
SPX, -0.81[ads1]%
fell 20 points, or 0.7% to 2.770. Nasdaq Composite Index
COMP, -1.07%
fell 63 points, or 0.9% to 7.377.
Read
: December is historically the most amazing time of year for shares
What drives the market?
Skepticism around the United States and China's ability to reach a concrete agreement to avoid new or expanded bilateral tariffs increases as investors focused on the lack of concrete concessions from China at last weekend's G20 meeting in Argentina where President Trump and Chinese leader Xi Jinping met.
While the United States agreed 90-day moratorium on threats to raising tariffs of more than $ 200 billion in annual imports to 25% from 10%, a comparison of official statements by Chinese and American officials suggests that there may be a long way to go before the two camps are able to reach agreement to simplify the tension more permanently.
Meanwhile, confusion spread on Monday night when the 90-day timeline would begin after White House's economic advisor Larry Kudlow erroneously stated that the negotiation window would begin on January 1, 2019. The White House subsequently investigated a correction saying that It began December 1st.
Investors also flatten the American yield curve, as the return on sovereign debt continues on Tuesday. On Monday, interest rates on five-year government debt fell below the yield on three-year debt, a phenomenon that has gone before earlier recession, and an indicator that investors are more confident of today's than future economic growth as the Federal Reserve increases prices.
A wider demand spread, as between 2-year returns
TMUBMUSD02Y, + 0.15%
and 10-year rate
TMUBMUSD10Y, -1.16%
tightened to 13.3 basis points, the narrowest in 11 years. This relationship is a popular goal for future economic growth, and if the 10-year return falls over the two years, it will raise significant concerns for an imminent recession.
Which stocks are in focus?
Apple Inc. .
AAPL, -2.28%
shares fall 3.3% early Tuesday after the stock was one of the leaders of Monday's rally as it rose 3.5%.
Shares of Movado Group, Inc .
