It was a rough day in the US stock market on Tuesday, as investors reacted to a series of not promising economic reports and forecasts.
Although the Dow was down as much as 462 points during the day, it rallied slightly to close down 302 points. The Nasdaq tumbled 1.9 percent while the S&P 500 fell 1.4 percent. Despite having a good run over the last few weeks, US crude oil plummeted 2.2 percent on the day.
Headlining the day’s bad news was the report that US home sales had their worst month in over three years. The report by the National Association of Realtors indicated that sales of existing homes dropped 6.4 percent in December.
News on the global front was even less optimistic, as investors fear that the world’s economy may be slowing down indefinitely. A report out of China rang the alarm bells when it demonstrated the world’s second-largest economy grew at its weakest pace in almost 30 years. The White House did not do much to assuage the fears of investors with the news that the Trump administration declined the offer by China to continue trade negotiations. It is no secret that the ongoing trade tensions have become a source of discontent for both the domestic economy and that of China.
According to the “Financial Times,” officials in the White House have rescinded the invitation to two Chinese trade representatives to visit the US this week in order to prepare for talks next week with US Trade Representative Robert Lighthizer and China’s vice-premier. The report of the cancellation of these talks caused the Dow to drop another 100 points. However, a denial of the report by White House economic adviser Larry Kudlow caused the stocks to rebound to end the day.
The World Economic Forum in Davos, Switzerland also provided a series of reports that did not look favorably at the global economic forecast. Although the reports came out yesterday, the closure of the US markets due to the Martin Luther King, Jr. holiday caused a delay in domestic market reaction.
Tensions in the United Kingdom over the no-deal Brexit are also aggravating the world market scene. Struggling economies in Turkey and Germany are also causing a burden on the global scale.