Wednesday's Stock Market Close: Dow Plunges Nearly 500 Points On Economic Worries

Fears about the global economy and uncertainty over Brexit sent U.S. stocks lower Wednesday as President Trump railed against House Democrats and the impeachment investigation. London’s FTSE posted its biggest loss in more than three years.
The Dow Jones Industrial Average, which plunged more than 550 points during the session, closed off 494 points or 1.86% at 26,078.62, its worst performance in a month. The S&P 500 dropped 52 points or 1.79% to 2,887.61 while the Nasdaq Composite put it it, worst performance in two months, giving up 123 points or 1.56% to 7,785.25.
Volume on the New York Stock Exchange totaled 3.1 billion shares with 687 issues advancing and 2,275 declining.
Leading the most actives were Ford (F), which was off more than 3%, Stars Group (TSG) and Bank of America (BAC).
ADP reported Wednesday the U.S. economy added 135,000 non-farm jobs in September, the weakest performance in three months, and August’s figure was lowered by nearly 40,000 to 157,000 jobs. The ADP National Employment Report showed half of the hiring was done by companies with at least 500 employees and 94% of those jobs (127,000) were in the service sector. Natural resources and mining lost 3,000 jobs while manufacturing added a paltry 2,000.
U.S. auto sales for the third quarter were mixed with General Motors (GM) reporting a 6.3% increase over the same period last year and Ford sales sinking 4.9% on short inventories of its Explorer while Fiat Chrysler’s (FCAU) sales were flat. All were trading in the red.
The nearly month-old strike against General Motors is proving costly. Analysts estimate GM already has lost more than $1 billion for the quarter, $480 million in the first week of the strike and $575 million in the second.
U.S. manufacturing numbers hit a 10-year low in September, data from the I nstitute for Supply Management indicated Tuesday. The factory index slipped to 47.8, its lowest point since June 2009, surprising economists.
Stephen Taddle, managing partner at Stellar Capital Management, said the stock market’s exuberance is finally catching up with reality. “The stock market has been a bit more optimistic than the economic data this year,” he noted.
Overseas, Germany’s leading economics research institutes lowered growth forecasts for the country, citing slowing global demand. British manufacturing also is in its longest slump since 2009 with companies stockpiling in advance of Brexit. Nissan (NSANY) is considering moving its manufacturing out of the U.K., and Jaguar Land Rover already has announced a weeklong closure in November to guard against supply disruptions.
“The U.S. economy is in the latter stages of the economic cycle and the global economy is clearly suffering from the trade war,” said Adrian Lowcock, head of personal investing at Willis Owen Limited.
British Prime Minister Boris Johnson presented a five-point plan he said would serve as a basis for negotiating the United Kingdom’s exit from the European Union. The plan received a chilly reception from opposition leaders and the Irish Republic.
In a letter to European Commission President Jean-Claude Juncker, Johnson noted there’s “very little time” to work out a deal ahead of the Oct. 31 deadline. Johnson again reiterated he has no intention of seeking an extension and said he would break off talks if the other 27 members of the EU rejected his proposals out of hand.
The sticking point is still the border between the Republic of Ireland and the Northern Ireland.
Trump tweeted insults against Democrats again Wednesday as House Intelligence Committee head Adam Schiff and House Speaker Nancy Pelosi warned they are not fooling around. Democrats said they would subpoena documents related to Trump’s July 25 call to Ukraine’s president during which he asked Volodymyr Zelensky to do him a favor and investigate former Vice President Joe Biden, the leading contender for the 2020 presidential nomination.
Pelosi said she thinks Trump is running scared.
“Overall, the toxic mix of weak economic data, trade concerns, and political uncertainty all weigh on stocks,” said Yohay Elam, currency analyst at FXStreet. “Reports that the US is considering limits on Chinese investments continue weighing despite a denial from the White House. And to top it off, the fast-moving impeachment inquiry increases political uncertainty and also hurts stocks.”
On global markets, Hong Kong’s Hang Seng fell 49 points or 0.19% while Japan’s Nikkei 225 fell 106 points or 0.49% and China’s Shanghai Composite fell 27 points or 0.92%. Australia’s S&P/ASX fell more than 100 points or 0.94%.
London’s FTSE 100 was off nearly 237 points or 3.23%, the German Dax fell 338.58 points or 2.76% and the French CAC 40 was off 174.86 points or 3.12%.
The British pound was fell 0.05% to $1.29 while the euro ticked up 0.25% to nearly $1.096 The dollar index was off 0.11%.
Oil futures edged lower. Crude oil fell to $52.59 a barrel, off 1.88% while Brent crude fell to $57.55, down 0.26%. Gold and silver were higher, with gold futures selling for $1,505.40 an ounce, up 1.09%, and silver at $17.61 an ounce, up 1.81%.
Yield on the 10-year Treasury note fell to 1.6% off 0.037% while the 30-year note fell to 2.09%, off 0.004%.
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