(For a live blog on the U.S. stock market, click LIVE/ or
type LIVE/ in a news window.)
* All 3 major indexes reverse gains as Trump announces new
tariffs
* 10-year Treasury yields dip to more than 2-1/2-year low
* GM, Kellogg, Verizon, Yum Brands post better-than-expected
earnings
* U.S. manufacturing grows at slowest pace in nearly 3 years
* Indexes down: Dow 0.85%, S&P 500 0.78%, Nasdaq 0.76%
(Updates to late afternoon, changes byline, adds NEW YORK
dateline)
By Stephen Culp
NEW YORK, Aug 1 (Reuters) - Wall Street abruptly reversed
its gains on Thursday as U.S. President Donald Trump tweeted
that he would impose an additional 10% tariffs on $300 billion
in Chinese imports, sending the long-running U.S. China trade
war that has rattled markets for months back to center stage.
After spending most of the session on track for their best
day since June, all three major U.S. stock indices took a sudden
U-turn as investors quickly turned into sellers following the
tweet. Trump's remarks also sent U.S. Treasury yields lower, with
the 10-year yield dropping to its lowest level since November
2016.
The CBOE Volatility Index .VIX , a gauge of investor
anxiety, shot to its highest reading since June 5.
"It shows the market's sensitivity to trade," said Chuck
Carlson, chief executive officer at Horizon Investment Services
in Hammond, Indiana. "This is a continuation of the fraying that
seems to be going on with the trade talks.
"Nobody knows what Trump's agenda is, what he would look at
as a win," Carlson added. "Obviously he's seeing China's
reluctance to do anything toward a resolution and he's throwing
in a grenade."
Earlier in the session, Wall Street got a boost from
positive earnings from a wide range of companies, including
General Motors Co GM.N , Kellogg Co K.N , Verizon
Communications Inc VZ.N and Yum Brands Inc YUM.N , among
others.
In economic news, the U.S. manufacturing sector expanded at
its slowest pace in almost three years in July, according to the
Institute for Supply Management's purchasing manager index
(PMI).
"The manufacturing space in the U.S. is slowing," said
Robert Pavlik, chief investment strategist, senior portfolio
manager at SlateStone Wealth LLC in New York. "It's something to
be mindful of.
"If you want to say the Fed had to cut rates, that's a good
reading to point to," Pavlik added.
Investors now look to Friday's release of the Labor
Department's closely watched jobs report, which is expected to
show the U.S. economy added 164,000 jobs last month, with the
unemployment rate seen holding steady at 3.7%.
The Dow Jones Industrial Average .DJI fell 227.81 points,
or 0.85%, to 26,636.46, the S&P 500 .SPX lost 23.38 points, or
0.78%, to 2,957 and the Nasdaq Composite .IXIC dropped 61.86
points, or 0.76%, to 8,113.56.
Of the 11 major sectors in the S&P 500, eight were trading
lower, with financials .SPSY and trade-sensitive industrials
.SPLRCI seeing the biggest losses.
Second-quarter earnings season continues at full throttle,
with 355 of S&P 500 companies having reported. Of those, 74.4%
have bested Street estimates, according to Refinitiv data.
Analysts now see S&P 500 earnings growth of 2.5%, up from
just 0.3% a month ago, per Refinitiv.
Pick-ups and SUVs drove General Motors' second-quarter
profit beat, but the automaker's stock turned negative after the
Trump tweet and was last down 0.6%.
Verizon shares rose 0.6% after the largest U.S. mobile
carrier surprised consensus estimates to the upside, reporting
more net monthly phone subscribers than expected. Kellogg surged 10.1% as higher North American demand helped
the packaged food company beat second-quarter estimates.
Shares of Yum Brands Inc jumped 4.4% after beating analyst
profit and sales expectations on better-than-expected growth at
all its restaurant chains, which include Taco Bell and Pizza
Hut. Declining issues outnumbered advancing ones on the NYSE by a
1.57-to-1 ratio; on Nasdaq, a 1.60-to-1 ratio favored decliners.
The S&P 500 posted 28 new 52-week highs and 10 new lows; the
Nasdaq Composite recorded 73 new highs and 97 new lows.