Intel stock extends gains after report of possible U.S. government stake
* Yuan breaches key level, drawing criticism from Trump
* Technology shares lead broad sell-off
* Tyson Foods rises after profit beats estimates
* Indexes plummet: Dow 2.9%, S&P 2.98%, Nasdaq 3.47%
(Updates to market close)
By April Joyner
NEW YORK, Aug 5 (Reuters) - Wall Street's major indexes
posted their biggest percentage drop of the year on Monday as a
fall in the yuan following U.S. President Donald Trump's vow to
impose additional tariffs on Chinese goods sparked fears of
further escalation of the U.S.-China trade war.
While stocks pared losses in the last hour of trading to
finish off their session lows, the benchmark S&P 500 fell about
3% to notch its biggest one-day percentage decline since Dec. 4.
The index has fallen for six straight sessions and is now about
6% below its record closing high on July 26.
The yuan weakened past the seven-per-dollar level, its
lowest in 11 years, after the People's Bank of China, with the
blessing of policymakers, set its daily midpoint at the weakest
level in eight months. On Twitter, Trump called the action a "major violation" and
"currency manipulation." Several investors viewed the move in the yuan as a direct
response to Trump's announcement of 10% tariffs on an additional
$300 billion of Chinese imports.
"It's the escalation of the trade war," said Steven
DeSanctis, equity strategist at Jefferies in New York. "The
dollar strengthening presents another issue. For companies that
do a lot of business outside the U.S., it all adds up."
A weaker yuan and a stronger dollar pose challenges for U.S.
companies that do substantial business in China by effectively
raising the cost of their goods for Chinese customers.
Adding to the tensions, China's Commerce Ministry said that
Chinese companies have stopped buying U.S. agricultural products
and that China will not rule out imposing import tariffs on U.S.
farm products that were bought after Aug. 3. Shares of S&P 500 technology companies .SPLRCT , which are
heavily exposed to Chinese markets, dropped 4.1%.
Apple Inc AAPL.O shares slid 5.2% as analysts warned that
the newly proposed tariffs may hurt demand for the iPhone, while
the Philadelphia semiconductor index .SOX dropped 4.4%.
Stocks could slide further if there are no signs of
improvement in U.S.-China trade relations before September, when
the recently announced tariffs are to take effect, said Keith
Lerner, chief market strategist at SunTrust Advisory Services in
Atlanta.
"There's a little bit of a vacuum in the market for the next
several weeks," he said. "We're in this corrective phase, and it
likely has further to go."
The Dow Jones Industrial Average .DJI fell 767.27 points,
or 2.9%, to 25,717.74, the S&P 500 .SPX lost 87.31 points, or
2.98%, to 2,844.74 and the Nasdaq Composite .IXIC dropped
278.03 points, or 3.47%, to 7,726.04.
The Cboe Volatility Index .VIX , an options-based gauge of
investor anxiety, rose 6.98 points to 24.59, its highest in
about seven months.
No. 1 U.S. meat processor Tyson Foods Inc TSN.N was one
bright spot. Its shares rose 5.1% after the company beat
quarterly profit estimates. Declining issues outnumbered advancing ones on the NYSE by a
6.36-to-1 ratio; on Nasdaq, a 6.46-to-1 ratio favored decliners.
The S&P 500 posted three new 52-week highs and 32 new lows;
the Nasdaq Composite recorded 13 new highs and 280 new lows.
Volume on U.S. exchanges was 9.41 billion shares, compared
with the 6.8 billion average for the full session over the last
20 trading days.