The Dow Jones Industrial Average closed more than 400 points on Tuesday (August 2) as investors worried about political tensions between the United States and China. After Mrs. Nancy Pelosi, Speaker of the US House of Representatives, visited Taiwan and caused dissatisfaction with China.
The Dow Jones Industrial Average closed at 32,396.17, down 402.23, or -1.23%, the S&P500 closed at 4,091.19, down 27.44, or -0.67%, and the Nasdaq closed at 12,348.76, down 20.22, or -0.16%.
China’s Foreign Ministry issued a statement condemning the United States as soon as Pelosi arrived in Taiwan late yesterday evening. By stating that it violates the One China Principle. This will affect the fundamental political relationship between China and the United States. including violating China’s sovereignty and territorial integrity. It also undermines stability and peace in the Taiwan Strait.
The statement stated that China opposes and cannot accept U.S. Congressman’s visit to Taiwan. including the journey of Mrs. Pelosi who is the president of Congress China will take all necessary measures to protect its sovereignty and territorial integrity in response to Pelosi’s visit to Taiwan. and the United States shall be liable for all consequences. including halting interference in China’s internal affairs.
Worries about US-China tensions sent U.S. stocks lower, with 11 stocks calculated in the S&P500 closed in negative territory, led by a 1.3 percent drop in real estate stocks, with Jones Lang LaSalle shares. American Realty Investors fell 2.50 percent, while Armada Hoffer Properties was down 1.20%.
Banking stock indexes fell 1.07 percent, continuing their decline since Monday. JPMorgan was down 1.63 percent, Morgan Stanley was down 0.67%, Bank of America was down 2.02 percent and Goldman Sachs was down 1.32 percent.
Shares of Caterpillar, the world’s largest construction tool maker, fell 5.86 percent after the company reported second-quarter revenue of $14.25 billion. Below analysts’ estimates of $1428 billion.
Shares of U.S. cosmetics giant Estee Lauder fell 1.85 percent on Wall Street. The Journal reports that Estee Lauder is in talks to acquire global luxury fashion brand Tom Ford. The amount of this acquisition is expected to reach $3 billion.
However, arms manufacturing stocks surged. Amid US-China tensions, Northrop Grumman was up 1.04 percent, Lockheed Martin was up 2.27 percent, and Raytheon Technologies was up 2.27 percent. Shares of General Dynamics were up 0.29% and L3Harris Technologies was up 1.23%.
Uber Technologies shares jumped 18.90% after the company posted second-quarter revenue of $8.07 billion. That was higher than analysts’ estimates of $7.39 billion.
Investors eyeing earnings reports of major listed companies today. This includes Starbucks, PayPal and Advanced Micro Devices (AMD).
In addition, investors are still waiting to see the numbers of non-farm payrolls and the unemployment rate for July in the United States on Friday. To signal the next interest rate direction of the US Federal Reserve (Fed).