Prospect of U.S.-China Trade War Sinks Stock Market Prices
The prospect of an escalating trade war between the U.S. and China led to major losses in the stock market today.
President Trump's administration did not back off threats to impose higher tariffs on Chinese goods if a deal wasn't reached by the two sides before midnight on Friday. The three major stock indexes were all down more than 1.5 percent and Treasury bond yields fell sharply as investors expect a trade war between the world's two biggest economies to have dire consequences.
The Entrepreneur Index™ fell 2.0 percent with steep losses across all sectors of the market. Only two stocks on the index were up today. Ford Motor Co. gained 0.1 percent and Kinder Morgan was up 0.62 percent, buoyed by the disclosure of chairman of the board Richard Kinder's recent $7.8 million purchase of shares in the pipeline manager.
All four FAANG stocks on the Entrepreneur Index™ were down more than one percent today, with Facebook (-2.12 percent) falling the furthest. Twitter, down 4.0 percent, had the biggest loss in the sector, followed by chip-maker NVIDIA Corp. (-3.7 percent) and salesforce.com (-3.26 percent).
Regeneron Pharmaceuticals had the biggest loss on the index today, falling 6.34 percent after it reported poor first quarter earnings this morning. The drug-maker missed revenue estimates by a small margin but reported earnings more than twenty percent below expectations. The stock, down 13.7 percent so far this year, is now within twelve percent of its 52-week low.
Clothing makers L Brands and Ralph Lauren Corp. were both down sharply, dropping 5.07 percent and 3.36 percent respectively. Discount retailer Dollar Tree Inc. fell 2.92 percent and Bed Bath & Beyond was off 3.49 percent. Gap Inc. also fell 2.88 percent. Fedex Corp., a bellwether for sentiment on the global economy, was down 2.66 percent on the day.
Casino-operator Wynn Resorts was not surprisingly down big again today. The company derives more than 70 percent of its revenues from casinos in Macau, and deteriorating relations with China could jeopardize the renewal of its gaming licenses in the former Portuguese colony. The stock was down 4.0 percent today after a more than four percent drop yesterday.
The REIT sector, normally stable when interest rates decline sharply, was anything but stable today. All nine REITs on the Entrepreneur Index™ were down more than one percent. Macerich Company (-4.37 percent) and Simon Property Group (-2.29 percent) had the biggest declines.
Tesla shares, recently up after the company announced plans to raise $2.7 billion in new capital, were down 3.04 percent today. Hedge fund manager David Einhorn, a notable short seller of Tesla's stock, slammed the company and CEO Elon Musk at an investment conference in New York yesterday. Einhorn said Musk's prediction that autonomous vehicles would eventually give Tesla a $500 billion market cap "a lot of horses ...t." Tesla currently has a market value of $43.7 billion. The shares are down 25.8 percent this year.
While the market was falling for most of the day, a rally in the last half hour before the market close helped pare some of the losses.
The Entrepreneur Index™ collects the top 60 publicly traded companies founded and run by entrepreneurs. The entrepreneurial spirit is a valuable asset for any business, and this index recognizes its importance, no matter how much a company has grown. These inspirational businesses can be tracked in real time on Entrepreneur.com.