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* U.S. factory sector contracts for first time since 2016
* China, U.S. kick off new round of tariffs
* Tech stocks weigh most on S&P 500
* Casino stocks under pressure from weak Macau data
* Indexes fall: Dow 1.48%, S&P 500 1.06%, Nasdaq 1.11%
(Updates to open)
By Uday Sampath Kumar
Sept 3 (Reuters) - Wall Street fell on Tuesday after data
showed U.S. manufacturing sector contracted for the first time
since 2016 in August, adding to fears that a protracted
U.S.-China trade war could tip the world's largest economy into
recession.
The Institute for Supply Management said its index of
national factory activity decreased to 49.1, compared with a
reading of 51.1 estimated by analysts polled by Reuters.
The weak data also weighed on U.S. Treasury yields, with the
benchmark 10-year yield US10YT=RR falling to its lowest since
July 2016. Shares of banks .SPXBK , which typically come under
pressure in a low interest rate environment, slid 2%.
Trade-sensitive industrials .SPLRCI slipped 1.77%, while
technology stocks .SPLRCT fell 1.38%.
In an escalation of their trade war, the United States on
Sunday began imposing 15% tariffs on a variety of Chinese goods,
and China began imposing new duties on U.S. crude oil.
The tariffs that went into effect on Sunday are making
investors increasingly cynical towards the trade war, Peter
Cardillo, chief market economist at Spartan Capital Securities
in New York said.
The S&P 500 index fell 1.8% in August, its biggest monthly
drop since May, after escalating trade tensions and the
inversion of a key part of the U.S. yield curve, seen as a sign
of recession, drove investors toward safe-haven assets.
However, trade tensions were dialed down last week following
signals that Beijing and Washington would meet in September for
talks, but Bloomberg reported on Monday that the two sides were
yet to agree on a date for the planned meeting.
The energy sector .SPNY tumbled nearly 2% and was the
biggest loser among the 11 major S&P sectors, as rising OPEC and
Russian crude output drove a 4% slump in oil prices. O/R
Chipmakers, which draw a large portion of their revenue from
China, also fell, with the Philadelphia Semiconductor index
.SOX off 2.06%.
At 10:16 a.m. ET the Dow Jones Industrial Average .DJI was
down 391.94 points, or 1.48%, at 26,011.34, the S&P 500 .SPX
was down 30.94 points, or 1.06%, at 2,895.52 and the Nasdaq
Composite .IXIC was down 88.11 points, or 1.11%, at 7,874.77.
U.S. casino operators felt the brunt of slowing economic
growth in China as gambling hub Macau posted an 8.6% decline in
August casino revenue, sending shares of Wynn Resorts Ltd
WYNN.O , Las Vegas Sands Corp LVS.N and MGM Resorts
International MGM.N down between 3% and 4%. Declining issues outnumbered advancers for a 2.47-to-1 ratio
on the NYSE and for a 2.65-to-1 ratio on the Nasdaq.
The S&P index recorded 19 new 52-week highs and four new
lows, while the Nasdaq recorded 25 new highs and 76 new lows.