Wall Street falls on soft PMI data, U.S. tariffs on metal imports

(Reuters) – Wall Street fell on Monday after President Donald Trump said he would restore tariffs on metal imports from Brazil and Argentina, while weak domestic manufacturing data fanned worries of a slowing economy in the wake of the U.S.-China trade war.

Trader Jonathan Corpina works with children during a traditional bring-your-kids-to-work day on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 29, 2019. REUTERS/Brendan McDermid

The U.S. economy’s manufacturing sector contracted for a fourth straight month in November, as new order volumes slid back to around their lowest level since 2012. Construction spending also unexpectedly fell in October.

The figures were in sharp contrast to recent economic indicators that had reassured investors of a resilient domestic economy. Global markets had also cheered an unexpected rebound in Chinese manufacturing earlier in the day. [MKTS/GLOB]

However, Trump’s tweet about restoring tariffs on U.S. steel and aluminum imports from Brazil and Argentina dampened the mood and prompted officials in the two South American countries to seek explanations.

“The concern here is what kind of retaliatory response those countries might have, let alone sort of a re-escalation of these tariff wars in the midst of trying to resolve one,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

The news sent shares of U.S. steel makers including U.S. Steel Corp (X.N) and AK Steel Holding Corp (AKS.N) up 3% and 7%, respectively.

The gains were an exception in a wider selloff, with 10 of the 11 major S&P 500 sectors trading lower. The technology sector .SPLRCT was off 1.3% and was the biggest drag on the benchmark index.

Hopes of an imminent “phase one” trade U.S.-China trade deal and upbeat U.S. economic data sent Wall Street to record highs early last week.

Retail stocks including Target Corp (TGT.N) and Walmart Inc (WMT.N) were in focus, with Cyber Monday sales expected to hit a record following $11.6 billion in online sales on Thanksgiving and Black Friday.

At 10:27 a.m. ET the Dow Jones Industrial Average .DJI was down 161.38 points, or 0.58%, at 27,890.03, the S&P 500 .SPX was down 22.50 points, or 0.72%, at 3,118.48 and the Nasdaq Composite .IXIC was down 99.57 points, or 1.15%, at 8,565.90.

Among other stocks, Roku Inc (ROKU.O) dropped 16.6% as Morgan Stanley downgraded the video streaming device maker’s shares to “underweight”.

Declining issues outnumbered advancers for a 2.13-to-1 ratio on the NYSE and a 2.34-to-1 ratio on the Nasdaq. The S&P index recorded 16 new 52-week highs and two new lows, while the Nasdaq recorded 50 new highs and 18 new lows.

Reporting by Arjun Panchadar and Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty, Arun Koyyur and Shounak Dasgupta

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