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* U.S. factory activity shrinks for first time since 2016
* Technology stocks weigh most on S&P 500, industrials
tumble
* Boeing (NYSE:BA) off on fears of more delays to 737 MAX return
* Indexes fall: Dow 1.28%, S&P 500 0.91%, Nasdaq 1.33%
(Updates to late afternoon, adds commentary, changes byline,
adds NEW YORK dateline)
By Sinéad Carew
NEW YORK, Sept 3 (Reuters) - U.S. stocks fell on Tuesday
after the United States and China imposed new tariffs on each
other and data showed U.S. factory activity shrank in August for
the first time since 2016, renewing growth fears.
Investors fled riskier assets as the latest face-off gnawed
at any hopes for a resolution to the long-running U.S.-China
trade war, which has rattled markets for months and weighed on
world economies.
Adding to the uncertainty, the Institute for Supply
Management said its index of national factory activity dropped
to 49.1, compared with a reading of 51.1 estimated by analysts
polled by Reuters.
The uncertain outlook also pushed the benchmark 10-year U.S.
Treasury yield US10YT=RR to its lowest level since July 2016
as bonds were in demand.
"Sentiment was already poor to start the day and then the
weaker-than-expected manufacturing data just added fuel to the
fire," said Dave Mazza, managing director and head of product at
asset management firm Direxion in New York.
"We now have confirmation that the escalation in the trade
war has spilled over to U.S. manufacturing just as it has to
manufacturing around the globe," he added.
At 2:55PM ET, the Dow Jones Industrial Average .DJI fell
336.92 points, or 1.28%, to 26,066.36, the S&P 500 .SPX lost
26.73 points, or 0.91%, to 2,899.73 and the Nasdaq Composite
.IXIC dropped 105.76 points, or 1.33%, to 7,857.13.
Earlier in the day data showed British construction
companies last month suffered the sharpest drop in new orders
since the financial crisis due to jitters about Brexit.
"It's not just tariffs. Tariffs are the main thing but there
are other areas of unknown which tend to be a bad thing for
stocks. People like certainty," said JJ Kinahan, chief market
strategist at TD Ameritrade in Chicago.
Trade-sensitive industrials .SPLRCI fell 1.8%, the biggest
percentage loser among the S&P 11 major sectors. Technology
stocks .SPLRCT fell 1.5%, weighed down by chipmakers, which
have large revenue exposure to China. The Philadelphia
Semiconductor index .SOX dropped 2.2%.
Boeing Co shares BA.N , tumbled 3%, weighing on the Dow,
after the Federal Aviation Administration said on Friday a
global panel of experts will need a few more weeks to finish its
review of the company's 737 MAX certification. U.S. casino operators felt the brunt of slowing economic
growth in China as gambling hub Macau posted weak August casino
revenue. Shares of Las Vegas Sands Corp LVS.N , Wynn Resorts
Ltd WYNN.O and MGM Resorts International MGM.N fell between
2% and almost 5%. Among the few gainers were the defensive utilities
.SPLRCU , real estate .SPLRCR and consumer staples .SPLRCS
sectors.
Declining issues outnumbered advancing ones on the NYSE by a
1.90-to-1 ratio; on Nasdaq, a 2.74-to-1 ratio favored decliners.
The S&P 500 posted 37 new 52-week highs and 9 new lows; the
Nasdaq Composite recorded 45 new highs and 125 new lows.