US close: Stocks close sharply lower as recession fears mount
By Iain Gilbert
Date: Monday 12 Aug 2019
(Sharecast News) - Wall Street stocks closed sharply lower on Monday, amid fears that ongoing tensions between the US and China could lead to a global recession.
At the close, the Dow Jones Industrial Average was down 1.49% at 25,896.44, while the S&P 500 was 1.23% lower at 2,882.69 and the Nasdaq Composite saw out the session 1.20% weaker at 7,863.41.
The Dow closed 391 points lower on Monday with stocks heading south early in the session after Hong Kong International Airport cancelled all departures for the day on the back of serious disruptions linked to the intensifying protests.
Protests across Hong Kong, which began in June, were turning into the Asian financial hub\'s most serious crisis in years and one of the key challenges for Chinese leader Xi Jinping since he became the nation\'s leader back in 2012.
Outside of Hong Kong, investors were still focused on trade tensions between Washington and Beijing after the People\'s Bank of China set its daily midpoint for yuan trading at 7.0211 per US dollar - below Friday\'s fix, but ahead of market expectations.
The yuan depreciated past the 7.0-per-dollar level during the previous week for the first time since the global financial crisis in 2008, prompting the US Treasury Department to brand China as a currency manipulator.
Bank of America raised its expectations for a recession to 1-in-3 in the next year, noting that many economic indicators were \"flashing yellow\".
Heading back Stateside, the benchmark 10-year Treasury yield, which slipped to its lowest level since 2016 last week, fell to 1.63%. The spread between 2-year and 10-year Treasury yields narrowed to only 6 basis points, near its lowest level in a dozen years.
Further weighing on sentiment were comments made by Donald Trump on Friday hinting at the possibility that the trade talks between the two global superpowers planned for September might not go ahead.
In corporate news, shares of global trade bellwether Caterpillar fell 2.2%, Boeing flew 1% lower and Office Depot sunk 5.6%.
Sysco was up 3.2% after beating Wall Street expectations for quarterly revenues, while Barrick Gold was ahead 1.85% on the back of some upbeat guidance.
Bank stocks were battered by during the session, with Bank of America and Goldman Sachs falling more than 2% and JP Morgan dropping 1.87%.
On the data front, the US fiscal deficit exceeded 2018\'s full-year figure, with spending growth outpacing revenues.
The gap grew to $866.8bn in the first 10 months of the year, up 27% year-on-year, according to the Treasury Department.
That figure was already wider than last fiscal year\'s total shortfall of $779bn, which itself was the largest federal deficit since 2012.
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