Dow Jones Industrial Average Plunges Another 400 Points as Trade Fears Shatter Investor Confidence

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The Dow Jones Industrial Average continued to sell off during Thursday’s premarket trading, plummeting 407 points before market open.

This morning’s losses followed on the heels of the Dow’s 799-point loss during Tuesday’s trading session. Markets were closed on Wednesday in honor of late U.S. President George H.W. Bush.

Global indexes fell sharply overnight following reports that Huawei CFO Meng Wanzhous was arrested by Canadian officials yesterday. Huawei, one of China’s largest semiconductor companies, is accused of violating U.S. sanctions against Iran.

The move is the latest in a string of attempts by the U.S. government to restrict what the government views as unfair trade practices by China’s largest firms.

The arrest of Meng comes at a difficult time for the markets, as investors remain convinced that the United States and China are deeply entrenched in a trade war. Expect index losses to rise over the course of today’s trading session.

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Here are the numbers from Tuesday for the Dow, S&P 500, and Nasdaq:

Index Previous Close Point Change Percentage Change
Dow Jones 25,027.07 -799.36            -3.10%
S&P 500 2,700.06 -90.31 -3.24%
Nasdaq 7,158.43 -283.09            -3.80%

Now, here’s a closer look at today’s Money Morning insight, the most important market events, and stocks to watch.

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The Top Stock Market Stories for Wednesday: Negative Market News Continues to Drive Sell-Off

  • dow jones industrial averageMarkets are still reacting to Monday’s drop in 10-year Treasury bonds. Treasury yields fell to 2.92%, the lowest level in over 10 years. While fluctuations in the 10-year Treasury bond yields are normal, investors are especially rattled by this drop because it’s caused the bond yield curve to “flatten out.” A flatter yield curve is normally viewed as a clear sign that a recession is on the horizon.
  • Oil prices fell by 3% as members of OPEC gathered in Vienna. The world’s largest oil cartel is trying to determine how to cut production and add support to global oil prices. The meeting in Vienna comes after oil prices plunged by 22% in November. U.S. oil prices are currently sitting at $52 per barrel, down from the $76 level we witnessed in October. Saudi Arabia has called on OPEC members to reduce output in order to boost prices; however, ongoing competition from the United States continues to weigh on supply expectations.

Three Stocks to Watch Today: FB, DE, AOBC

  • Shares of Facebook Inc. (NASDAQ: FB) were off another 3% after Stifel Nicolaus analysts slashed their outlook for the stock. The firm cut its rating on the social media giant from “Buy” to “Hold” after citing growing competitive forces that will weigh on the firm.
  • Shares of Deere & Co. (NYSE: DE) saw gains this morning after the iconic agricultural giant hiked its dividend. The firm increased its quarterly dividend by $0.07 to $0.76 per share. That 10% jump will go into effect on Feb. 1, 2019, for shareholders of record on Dec. 31.
  • Look for earnings reports from American Outdoor Brands Corp. (NASDAQ: AOBC), Broadcom Inc. (NASDAQ: AVGO), Hovnanian Enterprises Inc. (NYSE: HOV), Kroger Co. (NYSE: KR), Thor Industries Inc. (NYSE: THO), and Zumiez Inc. (NASDAQ: ZUMZ).

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