- 3rd June 2019
- Posted by: Hakeem
- Categories: Innovation, Technology
Stocks fell on Monday, the first trading day of the month, as it appeared the government was setting its sights on big tech because of antitrust concerns. Shares of Alphabet, Amazon, Facebook and Apple all dropped on the fear.
The Nasdaq Composite dropped 1.4%, led lower by sharp declines in Alphabet and Facebook. The tech-heavy index also entered correction territory, trading more than 10% below its record high set in late April. The Dow Jones Industrial Average declined by 60 points, while the S&P 500 slid 0.5%.
Alphabet shares pulled back 6.9% after reports said the Justice Department is preparing to launch an antitrust probe on Google. Meanwhile, Facebook dropped 8.4% after The Wall Street Journal reported the Federal Trade Commission would be able to look into Facebook’s practices and how they impact digital competition. Amazon shares fell 4.8% after The Washington Post said an arrangement between the Federal Trade Commission and the Justice Department put the e-commerce giant under the FTC’s microscope. Apple also slipped 1.2% after Reuters reported the Justice Department received jurisdiction to investigate the company’s practices.
Communications services, consumer discretionary and tech were the worst-performing sectors in the S&P 500. Communications dropped more than 3.2%, heading for its biggest one-day drop since late October, while consumer and tech both traded more than 1% lower.
“With the trade stuff going on, [big tech] has been a bit of a hiding place,” said Christian Fromhertz, CEO of The Tribeca Trade Group. “You just can’t hide right now.”
These concerns come amid worries over an economic slowdown while China’s rhetoric on U.S. trade relationship intensifies.
U.S. manufacturing activity in the U.S. fell last month to its slowest pace of growth since October 2016, according data from the Institute for Supply Management. The pace of expansion also disappointed economists polled by Refinitiv. Stocks fell to their session lows after the data was released.
On the trade front, Chinese Vice Commerce Minister Wang Shouwen said in a white paper Sunday that Washington would not be able to use pressure to force a trade deal on Beijing. He also refused to say whether the leaders of both countries would meet at the G-20 summit to work out an agreement later this month.
Wang added: “The U.S. has backtracked, and when you give them an inch, they want a yard.”
The remarks from Wang follow a month of heightened trade tensions between the world’s largest economies. The U.S. hiked tariffs on $200 billion worth of Chinese goods in May. China retaliated with higher tariffs on U.S. imports.
“This issue with China continues to be the big elephant in the room,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “If the two sides, China and the U.S., break down on these negotiations, we could see a 10% correction. We’re more than halfway there already and talks haven’t broken down yet.”
“There just aren’t a lot of things out there to drive the market so this issue continues to be the pivotal point,” Frederick said.
Shares of Boeing, a trade bellwether of global trade, fell 1.6%.
The benchmark 10-year U.S. note yield fell to as low as 2.071%, its lowest level since September 2017. Gold prices climbed to their highest point since late March, breaking above $1,320.
Trade worries also rattled Wall Street last week after President Donald Trump threatened to slap a 5% charge on all imports from Mexico. The threat sent stocks tumbling on Friday.
The major indexes fell more than 1% each on Friday to end a torrid month for Wall Street. Stocks logged in their first monthly decline of 2019, snapping a four-month winning streak.