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Consumer Stocks Tumble on Trade War Worries

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Growing trade tensions pressure Wall Street

Wall Street had a tough day on Monday, April 2, amid growing trade tensions between the US and China. The S&P 500 Index fell 58.99 points (or ~2.2%), and the Dow Jones Industrial Average Index tumbled 458.92 points (or 1.9%) as China raised tariffs on 128 US products, including frozen pork, wine, fruit, and nuts. China’s retaliation was in response to import duties levied by the US on Chinese aluminum and steel products.

Kate Warne of Edward Jones noted, “The tariffs imposed by China today lead to greater worries that we will see escalating tariffs and the possibility of a much bigger impact than investors were anticipating last week.”

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The S&P 500 Index closed below its 200-day moving average for the first time since June 2016. While all of the S&P 500 Index’s 11 major sub-sectors were in the red, the consumer discretionary (.SPLRCD), consumer staples (.SPLRCS), and technology (.SPLRCT) sub-sectors saw the largest declines with intraday losses of 2.8%, 2.5%, and 2.5%, respectively.

Consumer discretionary

Advance Autos (AAP) (5.6%), Amazon (AMZN) (-5.2%), and Netflix (NFLX) (-5.1%) were among the biggest drags on the consumer discretionary index. President Trump’s Twitter attack on Amazon was partially responsible for its price plunge.

Apparel and accessory stocks were also mostly down. Athletic specialty retailer Foot Locker (FL) fell 3.8%, and sportswear giant Nike (NKE) recorded a decline of 3.5%. Ralph Lauren (RL) and L Brands (LB) also lost more than 3.0% each. The seven-company S&P Apparel and Accessories Index declined 1.4% during the day.

Consumer staples

Tyson Foods (TSN)—the world’s second-largest processor and marketer of chicken, pork, and beef—saw the greatest impact among the consumer staples stocks and fell 6.2%. Walmart (WMT) (-3.8%) and Walgreens Boots Alliance (WBA) (-3.6%) were next in line in terms of losses. The seven-company S&P 500 Food and Staples Index fell more than 3.0% during the day.

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