Stocks plunge as weak manufacturing data highlights the pain of the trade war

Reuters


Stocks tumbled on Tuesday as weak factory data for August signalled the trade war is dampening demand for products from US manufacturers.

The Institute for Supply Management said its closely-watched purchasing managers index slid for the first time since January 2016. The index fell to 49.1 in August, and readings below 50 typically indicate the manufacturing economy is contracting.

The data also showed that US manufacturers are receiving fewer orders. The new orders index index fell to 47.2 in August, down from 50.8 in July. It’s the first time the gauge has dropped below 50 since December 2015.



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Respondents to the ISM’s survey of more 300 purchasing managers and supply chain executives said that trade remains the most significant issue for their businesses. The disappointing data comes shortly after the US and China imposed a new round of tariffs billions of dollars of products starting September 1.

President Trump suggested the trade conflict with China could last until 2020, and said that it would be “MUCH TOUGHER,” to strike a deal if gets elected to a second term.

“And then, think what happens to China when I win. Deal would get MUCH TOUGHER!” the president wrote in a number of tweets on Tuesday. “In the meantime, China’s Supply Chain will crumble and businesses, jobs and money will be gone!”

Here’s a look at the major indexes as of the 4 p.m. close on Tuesday:

Analysts from UBS predict Hurricane Dorian could cost insurance companies more than $US25 billion as the storm makes it way to Florida’s eastern coast. The firm increased its loss estimate and now expects the hurricane to inflict between $US5 billion and $US40 billion worth of damage. It also lifted its base case for the damage to $US25 billion, up from $US15 billion.

One of the last analysts covering Mallinckrodt, a large opiate producer, lowered his price target for the drugmaker to $US1 and said company’s shares could fall to $US0. Mallinckrodt’s stock price has cratered 85% this year due to its role in the opioid crisis.

Within the S&P 500, these were the largest gainers:

And the largest decliners:

Gains in utilities, real estate, and consumer staples were offset by broad losses across the remaining sectors of the S&P 500.

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