Wall Street stocks fall on US-China tensions, rate hike angst

NEW YORK (AFP) – Wall Street stocks finished Tuesday’s (Aug 2) volatile session lower following more hawkish comments from US central bankers and as jittery investors monitored China’s response to House Speaker Nancy Pelosi’s trip to Taiwan.

The yield on the 10-year US Treasury note rose sharply following comments from Cleveland Federal Reserve Bank president Loretta Mester and other central bankers that continued to vow aggressive interest rate hikes to counter inflation.

Despite Fed chairman Jerome Powell last week taking a hardline on rising prices, after announcing the second consecutive three-quarter-point increase in the benchmark borrowing rate, weak economic data raised investors’ hopes that policymakers would start to dial back their inflation-fighting campaign.

But recent remarks “have been more hawkish than what’s baked into consensus assumptions,” said B Riley Wealth Management chief market strategist Art Hogan.

Meanwhile, markets carefully monitored Ms Pelosi’s movements as she landed uneventfully in Taiwan. But China’s military said it was on “high alert” and would “launch a series of targeted military actions in response” to the US lawmaker’s visit.

The Dow Jones Industrial Average dropped 1.2 per cent to end the day at 32,396.17.

The broad-based S&P 500 shed 0.7 per cent to close at 4,091.19, while the tech-rich Nasdaq Composite Index declined 0.2 per cent to 12,348.76.

Among individual companies, Caterpillar slumped 5.8 per cent after it announced better-than-expected profits but pointed to supply chain problems and the strong dollar as headwinds.

Uber surged 18.9 per cent as it reported quarterly revenue more than doubled to US$8.1 billion (S$11.2 billion) amid strong demand for the company’s ride-hailing and food delivery services.

JetBlue Airways tumbled 6.4 per cent after results showed a US$151 million quarterly loss amid higher fuel and labour costs. The report comes on the heels of positive earnings by other leading carriers and after JetBlue announced plans to acquire Spirit Airlines for US$3.8 billion.