Stocks Fall on Trade War Worries, Hong Kong Unrest

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Here Are 3 Hot Things to Know About Stocks Right Now

  • The Dow Jones Industrial Average fell Monday as fears of a global recession from the ongoing U.S.-China trade war weighed on Wall Street and unrest in Hong Kong dented sentiment.
  • Viacom shares declined following reports the media giant was close to a merger agreement with CBS . Viacom is Real Money’s Stock of the Day.
  • Shares of General Electric were down after JPMorgan analyst Stephen Tusa said he’s holding on to his “below consensus” underweight rating on the stock.

Wall Street Overview

Stocks declined sharply Monday as fears of a global recession from the ongoing U.S.-China trade war weighed on Wall Street and unrest in Hong Kong dented sentiment.

© TheStreet Stocks Fall on Trade War Worries, Hong Kong Unrest

The Dow Jones Industrial Average fell 230 points, or 0.88%, to 26,056, the S&P 500 declined 0.64% and the Nasdaq was off 0.47%.

Hong Kong International Airport was abruptly closed Monday as pro-democracy demonstrators flooded into one of the world’s busiest terminals amid the 10th week of protests in the China-ruled territory that have officials — and investors — growing increasingly concerned. Officials were looking to open the airport early Tuesday.

Pfizer was the Dow’s biggest loser in recent trading, followed by Goldman Sachs and Caterpillar .

Goldman Sachs said in a note to clients that fears the U.S.-China trade war will lead to a recession have increased and the investment bank doesn’t expect a trade deal between the world’s two largest economies before the U.S. presidential election in 2020.

U.S. stocks closed lower on Friday after President Donald Trump said he wasn’t ready to reach a trade deal with China and that it would be “fine” if trade talks don’t take place next month.

Goldman Sachs lowered its forecast for U.S. growth in the fourth quarter by 20 basis points to 1.8% on a larger-than-expected impact from the trade developments.

“Unlike previous rounds of tariffs deployed by this administration, these new tariffs would largely impact the consumer, with duties being placed on goods such as clothing, footwear and toys,” said Glenmede Trust Company’s Investment Strategy Team in a research note. “The consumer has acted as the engine driving forward this record-long expansion as manufacturing slows, but these tariffs may likely erode their spending power.”

As tariffs remain in place, the note from Glenmede said, they likely will have a lasting effect on the level of real GDP growth, causing it to run below potential.

“However, we estimate their effect on the growth of real GDP will last only for the 12-month period after they go into effect,” the note said.

Shares in China on Monday rose 1.45% – the most in more than a month – after China’s central bank set the yuan at a stronger-than-expected 7.0211 to the dollar. Last, week China let the yuan slip through 7 to the lowest levels against the dollar in more than a decade, leading the U.S. to declare China a currency manipulator.

Trump announced on Aug. 1 that the United States would levy 10% tariffs on Sept. 1 on an additional $300 billion of Chinese imports in a bid to push Beijing to reduce its huge trade imbalance with the U.S. The threat from Trump prompted China to halt purchases of U.S. agricultural products.

Viacom shares were off 4.4% to $28.70 following reports the media giant was close to a merger agreement with CBS . Shares of CBS were off slightly to $48.64. Viacom is Real Money’s Stock of the Day.

Shares of General Electric fell nearly 1.4% to $9.02 after JPMorgan analyst Stephen Tusa said he’s holding on to his “below consensus” underweight rating on the stock even after last month’s stronger-than-expected second quarter earnings.
In the energy sector, Brent crude contracts for October delivery, the global benchmark, were up 15 cents to $58.68 a barrel, while West Texas Intermediate contracts for September, which are more tightly linked to U.S. gas prices, were up 32 cents at $54.82 a barrel.

Caterpillar, Goldman Sachs, and Viacom are holdings in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.

This article was originally published by TheStreet.