- A major slide in Home Depot and China-reliant stocks pushed the Dow Jones lower on Tuesday.
- Donald Trump’s tariff talk is mostly falling on deaf ears as hedge funds load up on risk ahead of an anticipated trade deal.
- US housing market data is strong, but economists don’t believe home prices alone can save a slowing domestic economy.
The Dow Jones slid beneath the 28,000 level as a confident stock market began to lose its nerve over Donald Trump’s aggressive stance on tariffs.
Given a sizeable buildup in risk-on China positions in the Dow, the risks from further trade war escalation have never been more apparent for a stock market close to record highs. Even after today’s stellar housing data, economists at ABN AMRO do not expect a robust real estate market to stave off risks of a recession in the US.
Dow Jones Lags Nasdaq; Tariff Fears Weigh on Global Outlook
Of the three major US stock market indices, the Dow Jones Industrial Average was comfortably the worst performer. The DJIA fell 91.36 points or 0.33% to settle at 27,944.86 just minutes before the closing bell.
The Nasdaq was able to rise 0.3%, while the S&P 500 tracked sideways (-0.01%), splitting the difference between the Dow’s losses and the Nasdaq’s gains.
The price of gold was 0.05% higher, even amidst a sharp move higher in the US dollar.
Oil prices took another sizable hit as crude lost more than 3%.
Stock Market at Risk of China Backlash as Hedge Funds Bet on Trade Deal
Investors continue to make sizeable risk-on bets in the stock market, anticipating a smooth resolution to the US-China trade war. As hedge funds pile into Dow staples with Chinese exposure, the threat of a significant breakdown in negotiations has arguably never been greater.
Even as Trump talks tough on tariffs, the sell-off in equities has been extremely mild in comparison to…