Extending their previous session’s losses, the US markets ended lower with cut of over half percent on Wednesday amid fresh concerns over US-China trade negotiations. Reports suggested that China is considering restricting the export of rare earth minerals, which are crucial for the US technology industry. The latest developments on the trade front have added fuel to investor fears that the dispute between the US and China could escalate into a full-fledged trade war. Trade war worries have increased the appeal of safe havens such as US treasuries, resulting in a sharp decline in bond yields. The slump in bond yields has in turn added to concerns that the US could be headed for a recession or at least a notable slowdown in the pace of economic growth.
Treasuries saw further upside on the day, driving the yield on the benchmark ten-year note down to its lowest level since September of 2017. However, overall trading activity was somewhat subdued as a lack of major US economic data kept some traders on the sidelines. Traders may have been looking ahead to the release of reports on first quarter GDP, pending home sales and personal income and spending in the coming days.
Dow Jones Industrial Average dropped 221.36 points or 0.87 percent to 25126.41, Nasdaq declined 60.04 points or 0.79 percent to 7547.31and S&P 500 was down by 19.37 points or 0.69 percent to 2783.02.
