Business

S&P 500 plunges in worst loss of year as trade war escalates

NEW YORK (AP) — U.S. stocks plunged to their worst loss of the year Monday and investors around the world scrambled to sell on worries about how much President Donald Trump’s worsening trade war will damage the global economy.

China let its currency, the yuan, drop to its lowest level against the dollar in more than a decade, a move that Trump railed against as “currency manipulation.” It also halted purchases of U.S. farm products. The moves follow Trump’s tweets from last week that threatened tariffs on about $300 billion of Chinese goods, which would extend tariffs across almost all Chinese imports.

The escalating dispute between the world’s largest economies is rattling investors unnerved about a global economy that was already slowing and falling U.S. corporate profits.

The S&P 500 dropped 87.31 points, or 3%, to 2,844.74 for its worst loss since December, when the market was wrapped in the throes of recession fears. It was down as much as 3.7% in the afternoon.

The Dow Jones Industrial Average lost 767.27, or 2.9%, to 25,717.74, and the Nasdaq composite fell 278.03, or 3.5%, to 7,726.04.

“A 3% drop in a day is very significant, and you’re seeing sizeable moves in every major foreign market,” said Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments.

“I am surprised at the market’s surprise at China’s retaliation,” he said. “We started a fight, and when the opponent punches back, I’m not sure why we’re surprised.”

The sell-off began Monday in Asia, where indexes lost more than 1%, and intensified as it swept westward through Europe to the Americas. Investors in search of safety herded into U.S. government bonds, which sent yields plunging.

The yield on the 10-year Treasury note, which rises with expectations of stronger economic growth and inflation, fell to its lowest level since Trump’s 2016 election energized markets, down to 1.72% from 1.85% late Friday. The yield on the two-year note, which is more influenced by interest-rate moves from the Federal Reserve, sank to 1.58% from 1.71%. Both are unusually large moves.

A warning light of recession in the bond market also began shining more brightly, which traders said may have added to the selling pressure on stocks. When short-term Treasury yields are higher than long-term rates, a rule of thumb says a recession may arrive in about a year. The three-month yield was at 2.00% Monday afternoon, 0.28 percentage points higher than the 10-year’s yield. A month ago, it was 0.21 points higher.

“The market sell-off is showing that there is a severe lack of confidence that this is going to work out for us economically, at least in the short term,” Weiss said.

Of course, the U.S. economy is still growing, the unemployment rate remains close to its healthiest level in nearly half a century and U.S. stock indexes set record highs just over a week ago. But the escalating trade tensions and investors’ disappointment that the Federal Reserve didn’t commit to a lengthy series of interest-rate cuts at its meeting last week have since sent the S&P 500 on a six-day losing streak, its longest since October. The S&P 500 is 6% below its record.

“A recession is still unlikely, but the probability of it is higher, still at less than 20%,” said Nate Thooft, head of global asset allocation at Manulife Investment Management.

The biggest threat coming out of the past week, he said, is that all the uncertainty about trade will scare CEOs and shoppers away from spending. That would threaten the expected ramp up in growth that economists have been expecting later this year. He expects U.S. economic growth to muddle along. It may fall as low as 1% and make things feel like a recession, he said, but a real recession remains unlikely in part because interest rates are low.

Technology stocks bore the brunt of Monday’s selling, and Apple slid 5.2%. It not only depends on Chinese factories to assemble its iPhones, but China is also the only country aside from the United States that accounts for more than 10% of its sales.

Companies are in the final stretch of the latest round of quarterly earnings reports, and results haven’t been as bad as initially feared, though still down from year-ago levels. Profit for companies in the S&P 500 is now expected to contract by roughly 1%. That’s better than the nearly 3% drop expected earlier. More than three quarters of the S&P 500 have reported financial results.

Meat producer Tyson Foods jumped 5.1% for the biggest gain in the S&P 500 after it reported profits that were better than Wall Street expected. It was one of only 11 stocks in the S&P 500 able to eke out a gain.

Gold rose as investors sought safer ground. It added $19.00 to $1,464.60 per ounce. Silver rose 13 cents to $16.35 per ounce, and copper fell 3 cents to $2.54 per pound.

Benchmark U.S. crude fell 97 cents to settle at $54.69 a barrel. Brent crude oil, the international standard, fell $2.08 to $59.81 a barrel. Wholesale gasoline fell 6 cents to $1.72 per gallon. Heating oil declined 5 cents to $1.84 per gallon. Natural gas fell 5 cents to $2.07 per 1,000 cubic feet.

In Asia, where tensions between Seoul and Tokyo are worsening in a trade dispute entirely separate from Washington’s and Beijing’s, Japan’s Nikkei 225 index fell 1.7%, and South Korea’s Kospi lost 2.6%. The Hang Seng in Hong Kong dropped 2.9%.

In Europe, France’s CAC 40 fell 2.2%, and the German DAX lost 1.8%. The FTSE 100 in London dropped 2.5%.

The dollar fell to 106.02 Japanese yen from 106.55 yen on Friday. The euro strengthened to $1.1202 from $1.1113.


AP Business Writer Damian Troise contributed.

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Mike Fiers, the Astros whistleblower, says he’s received death threats

(CNN) — Mike Fiers, the Major League Baseball pitcher who was the whistleblower in the Houston Astros’ sign-stealing scheme, has said that he has received death threats.

“Whatever, I don’t care,” Fiers said to the San Francisco Chronicle on Thursday. “I’ve dealt with a lot of death threats before. It’s just another thing on my plate.”

Fiers, who currently pitches for the Oakland Athletics, said to the Chronicle that he’s not concerned about his safety but that he is always concerned about his family’s safety.

In a November 12 story in The Athletic, Fiers said the Astros had engaged in sign-stealing methods in 2017 that violated MLB’s rules. Fiers pitched for the Astros in 2017, the year Houston defeated the Los Angeles Dodgers to win the franchise’s first World Series. The Athletic’s report with Fiers’ on-the-record comments spurred MLB to launch its investigation, which found that the Astros illegally created a system that decoded and communicated the opposing teams’ pitching signs to their own players.

On Tuesday, MLB commissioner Rob Manfred was asked if the league was concerned about Fiers’ safety — and, if so, what steps would be taken, particularly when the A’s play in Houston this season.

“We will take every possible step to protect Mike Fiers wherever he’s playing, whether it’s in Houston or somewhere else,” Manfred said at a press conference in Scottsdale, Arizona.

“I want to be really clear about this. Mike, who I do not know at all, did the industry a service. I do believe that we will be a better institution when we emerge at the end of this episode, and without a Mike Fiers, we probably would’ve had a very difficult time cleaning this up. It would’ve taken longer. I think we would’ve done it eventually, but it would’ve taken a lot longer. And I have a real problem with anybody who suggests that Mike did anything other than the right thing.”

Regarding MLB protection, Fiers said Wednesday to The Athletic: “I don’t know how they would.”

He added, “I’m not asking for extra security. I’m here to play baseball and I can defend myself, if anything. We do have National League games and I’m going to have to get into the box (to hit) just like everybody else. It’s part of the game. If they decide to throw at me, then they throw at me. There’s nothing much you can do about it.”

He also said, according to The Athletic: “I’ve dealt with a lot in my life. I’ve dealt with people hating me before. I’ve dealt with a lot of life problems. It is what it is. And if someone’s going to retaliate then by hitting me with a pitch, it’s not a big deal.”

There are strong opinions on either side when it comes to Fiers. One of those against him is former Boston Red Sox star David Ortiz, who said on Thursday that Fiers looks like a “snitch” for going public on the Astros’ scandal.

“I’m mad at this guy, the pitcher that came out talking about it,” Ortiz said at Red Sox spring training at JetBlue Park in Fort Myers, Florida.

“And let me tell you why. Oh, after you make your money, after you get your ring, you decide to talk about it. Why don’t you talk about it during the season when it was going on? Why you didn’t say, ‘I don’t want to be no part of it?’ So you look like you’re a snitch.”

When asked if he might consider returning his World Series ring, Fiers said he currently has no plans to do so unless it’s mandated for the 2017 team to do that.

“I said from the beginning, ‘I’m not away from this. I was part of that team, I was one of those guys,'” Fiers said to the Chronicle. “Suspensions, fines — I’m willing to take as much punishment as they do. If they ask me to (return the ring), it’s not the end of the world.”

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