Wall Street clawed its way back from deep losses Tuesday but still ended the day in the red as traders weighed a mix of geopolitical tensions and weak forecasts.
The Dow Jones industrial average shed 125.98 points to close at 25,191.43. At its lowest point in Tuesday’s volatile session, the blue-chip index was down nearly 550 points as US companies warned of higher material costs due to the trade war in China.
Both the S&P 500 and Nasdaq were off more than 2 percent at their lowest points before climbing back to end the day down 0.55 percent and 0.4 percent respectively as traders saw buying opportunities.
“We saw some buyers come in when the S&P gapped well below its 200-day moving average,” Mona Mahajan, US investment strategist at Allianz Global Investors, told The Post.
“We also saw the story about President Trump and President Xi meeting at the G20 meeting in November, which may have helped support sentiment,” she added.
But despite Tuesday’s late-afternoon rebound, there were still some scary spots in the market.
“The broad market peaked this summer,” Bruce Bittles, chief investment strategist at RW Baird, told The Post.
“There was a lot of celebration about new highs in September but it was really only a handful of stocks making new highs,” Bittles added.
Caterpillar was the weakest performer on the Dow Tuesday, falling 7.6 percent despite its third-quarter results beating analyst estimates.
But the heavy equipment company noted that recently instituted tariffs cost $40 million in the third quarter and will cost in the low end of the $100 million-to-$200 million range for the full year.
It added that price hikes in the range of 1 percent to 4 percent will go in effect in January 2019.
3M was the second-biggest laggard on the 30-stock index — falling 4.4 percent — after reporting weaker-than-expected earnings and lowering its forecast for the year.
In addition to weak forecasts by domestic companies, traders have been acting on “global slowdown fears,” Jack Ablin of Cresset Wealth Advisors said.
China’s Shanghai Composite Index closed down 2.3 percent Tuesday, reversing a two-day rally as growth worries persisted.
Also adding fuel to Tuesday’s panic selling was European Union’s decision to reject Italy’s proposed budget, deepening the rift between Rome and Brussels and sending yields on Italian bonds higher. Bond yields move inversely to price.
“Perhaps the combination of China’s growth deterioration plus a couple of disappointing earnings reports prompted investors to his the sell button today,” Ablin said.
