Lingering Trade War and Fears of a No-Deal Brexit Drive Stocks Down
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The stock market is inching downward at market open on Wednesday — a result of the cumulative effects of a lingering trade war, falling bond yields and fears of a no-deal Brexit.
The Dow Jones Industrial Average dropped 25 points to 25,573, as of 9:45 a.m. ET. The S&P 500 and the Nasdaq Composite also kicked off lower with a dip of 4 points and 31 points, respectively.
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Investors expressed concerns over the inverted yield curve, or the point where interest rates on U.S. Treasury bonds flip — leading two-year investments to pay higher than 10-year investments. The situation has been holding at its widest level since 2007 — the same year the economy declined, leading to the Great Recession.
Wall Street has also lamented the unpredictable trade war between the United States and China, with Trump yesterday signaling a return to the negotiating table despite Friday’s threat to hike tariffs on $300 billion worth of Chinese imports. (The news sent the Dow plunging 623 points to close last week.)
Two weeks ago, the U.S. Trade Representative said that the White House would delay its 10% levy on some of the $300 billion worth of products (or the fourth tranche) originating from China — such as mobile phones, laptops and toys as well as unspecified items of footwear and apparel — based on “health, safety, national security and other factors.” Originally scheduled to take effect on Sept. 1, the additional duty on the second set of items will be suspended until Dec. 15.
Internationally, worries over a potential no-deal Brexit have led businesses to brace for impact. Both the euro and the pound weakened following United Kingdom Prime Minister Boris Johnson’s announcement that he would make moves to suspend Parliament from mid-September to -October. (The move would reduce the amount of time for members to halt a no-deal Brexit before the deadline on Oct. 31.)
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