US stocks fell on Tuesday as fears of a recession gripped markets, outpacing optimism over US-China talks aimed at cutting tariffs.
The Dow Jones Industrial Average fell 194.14 points, or 0.62%, to open at 30,903.12.
The S&P 500 opened 32.72 points, or 0.86%, down at 3,792.61, while the Nasdaq Composite fell 163.66 points, or 1.47%, to 10,964.18.
The Treasury erased an earlier loss, with a 10-year yield of about 2.81%. The dollar went up.
US and Chinese officials discussed after reports that Washington is close to rolling back some trade tariffs imposed by the former administration. But investors are concerned over a possible US recession and stubborn inflation. While lowering tariffs on imported Chinese goods may impact consumer prices in the US, some suggest it may do little to quell inflation.
“With the first half of the year going into the rear-view mirror, investors can’t help but wonder what lies ahead in a year that has so far wrought heightened levels of uncertainty, disruption and procrastination that have spread across the spectrum.” The asset class’s values have affected the “goods, the bad and the ugly,” said John Stoltzfuss, chief investment strategist at Oppenheimer & Co.
US markets reopened on Tuesday after 13 falls in the past 11 weeks as the world’s largest economy contracted in the first quarter, raising prospects of a recession. At the same time, consumer prices have not peaked with inflation rising to 8.6% in May, leaving little room for the Federal Reserve to slow the monetary tightening.
“The Fed will likely remain aggressive in its fight against inflation,” said Joachim Clement, head of strategy, accounting and sustainability at Librem Capital. “At the same time, European growth is rapidly slowing down. It just fires up additional growth concerns about the US.”
In Australia, the central bank raised its key interest rate to 1.35%. It is among more than 80 central banks that have raised rates this year. The country’s dollar weakened after the verdict.
Crude oil prices hovered around $105 per barrel. Bitcoin is trading below the $19,500 level.