The Stock Market Suffers Worst Day of 2019

It was a day of bleeding on Monday for all of the indexes, as China retaliated against President Trump’s latest tariff move. President Trump recently announced that the U.S. would impose a 10% tariff on $300 billion worth of Chinese imports. The tariff will take effect on Sept. 1.

The index fell 767.27 points, or 2.9%, and closed at 25,717.74. It was down as much as 961.63 points during the day on Monday.

The S&P 500 also saw a big drop of almost 3% to 2,844.74 while the Nasdaq Composite fell 3.5% to 7,726.04.

It was the worst percentage drop for all three indexes this year. The S&P 500 is now more than 6% below its record hit only last month.

This was the six straight session of losses for the NASDAQ, its longest losing streak since 2016. The S&P 500 also saw its six straight day of losses while the Dow dropped for the fifth day in a row.

“Now we have a trade situation that is going off the rails as the side effects multiply due to the ramping up of the use of tariffs and we are only further apart from any resolution with the Chinese,” said Peter Boockvar, the chief investment officer at Bleakley Advisory Group. “The policy of using tariffs as a tool to address our legitimate beefs with the Chinese has failed miserably.”

The Chinese yuan fell to its lowest level in over a decade on Monday. According to Trump, China manipulated its own currency and tweeted, “This is a major violation which will greatly weaken China over time.”

China “appears to have decided that, given the increasingly dim prospects of a trade deal with the US, the boost to China’s export sector from currency depreciation is worth attracting the ire of the Trump,” remarked Julian Evans-Pritchard, senior China economist at Capital Economics.

He added, “The fact that they have now stopped defending 7.00 against the dollar suggests that they have all but abandoned hopes for a trade deal with the US.”