By Anora Mahmudova and Sara Sjolin, MarketWatch
Financials and energy stocks lead losses on the S&P 500
U.S. stocks turned sharply lower Tuesday as renewed worried
about global growth following weaker-than-expected manufacturing
data from China drove nervous investors out of stocks.
A surprise interest-rate cut in Australia added to global
economic gloom.
The S&P 500 slumped 20 points, or 1%, to 2,061, with nine of
the 10 main sectors trading lower. Financials stocks led the
decliners, with the sector down 1.7%, while energy and materials
suffered following a drop in oil prices.
The Dow Jones Industrial Average dropped 175 points, or 1%, to
17,717, while the Nasdaq Composite fell 3 points, or 1.1%, to
4,767, a day after scoring its first daily gain in eight
sessions.
The losses on Wall Street come after all three benchmarks closed
higher on Monday
(http://www.marketwatch.com/story/wall-street-stocks-lined-up-for-moderate-gains-ahead-of-ism-data-2016-05-02),
driven by data showing slow-but-steady economic growth in the
U.S.
Augustin Eden, research analyst at Accendo Markets, said
Tuesday's negative action came as investors digested the latest
news from China and Australia. In China, a private gauge of
nationwide factory activity in China fell to 49.4 in April
(http://www.marketwatch.com/story/chinas-caixin-manufacturing-pmi-slips-again-2016-05-02),
indicating a faster pace of contraction and missing analyst
forecasts.
"And there's been an Australia interest-rate cut
(http://www.marketwatch.com/story/dollar-slides-further-vs-yen-aussie-dollar-slumps-after-rate-cut-2016-05-03)
that's potentially signaling a little bit of panic over on that
side of the world and that has weakened the Aussie dollar quite a
lot," Eden said.
"If you look at gold, it's trading around $1,300 an ounce, which
if it breaks above that, that's a pretty good sign there'll be some
safe-haven seeking. So there's a bit of fear in the markets this
morning," he added.
The Australian dollar slumped to 75.70 U.S. cents
(http://www.marketwatch.com/story/reserve-bank-of-australia-cuts-cash-rate-to-175-2016-05-03-0485414),
down from 76.68 cents late Monday in New York.
The dollar, however, fell against most other major currencies as
the yen extended its recent gains against the greenback. The dollar
bought Yen105.88, compared with Yen106.54 late Monday, to trade
around a level not seen since 2014.
The euro also surged against the buck
(http://www.marketwatch.com/story/euro-leaps-above-116-for-first-time-since-august-dollar-dives-against-yen-2016-05-03),
buying $1.1579, up from $1.1535 on Monday, on more bets that U.S.
interest rates won't go up this year.
Data and Fed speakers: There was little on the economic data
front on Tuesday, with only monthly auto sales among major
releases.
Cleveland Fed President Loretta Mester is due to be on a panel
at an Atlanta Fed conference at 10:30 a.m. Eastern Time. Mester is
a voting member of the policy-setting committee this year.
Atlanta Fed President Dennis Lockhart, who is a non-voter, will
give a speech on the economic outlook and monetary policy in
Jacksonville, Fla., at 7 p.m. Eastern.
Movers and shakers: Energy companies were under pressure as
crude oil prices erased earlier gains and traded below $45 a barrel
again
(http://www.marketwatch.com/story/crude-oil-slammed-13-as-supply-glut-fears-return-2016-05-03).
Among the top S&P 500 decliners were Chesapeake Energy
Corp(CHK) and Devon Energy Corp(DVN), both down more than 3%.
Pfizer Inc.(PFE) rose after the drugmaker's first-quarter
earnings beat forecasts
(http://www.marketwatch.com/story/pfizers-stock-surges-after-results-beat-expectations-outlook-raised-2016-05-03).
Clorox Co.(CLX) advanced after the household products company
beat on profit and lifted its 2016 earnings outlook.
Molson Coors Brewing Co.(TAP) shares rose 1.5% after
better-than-expected earnings.
Other markets: Chinese stocks ended firmly higher
(http://www.marketwatch.com/story/china-stocks-rise-after-president-xi-jinpings-verbal-support-for-market-2016-05-03),
as investors appeared to welcome President Xi's call late last
Friday--after markets had shut -- to maintain a "healthy
development of the stock market." Chinese markets were closed for
trade on Monday for a holiday.
Europe markets dropped across the board
(http://www.marketwatch.com/story/european-stocks-slammed-as-euro-jumps-banks-sag-2016-05-03),
with a strong euro and weak bank earnings zapping investor
confidence.
Gold gave up earlier gains and moved slightly lower, down 0.1%
at $1,294.50 an ounce.
(END) Dow Jones Newswires
May 03, 2016 09:59 ET (13:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.