8 Oct

Dow Drops Due to Trump’s Blacklist and Pension Blockade

WRITTEN BY Rabindra Samanta

Today, the Trump administration blacklisted 28 Chinese firms due to human rights violations. However, the companies denied the allegations. The companies might have exploited Muslim minorities in the northwestern part of China. At 10:51 AM ET today, the Dow Jones Industrial Average Index fell around 1.1% or by 300 points. The index erased the gain of 372 points on October 4. The index fell due to renewed pessimism surrounding the US-China trade talks.

Dow Drops Due to Trump’s Blacklist and Pension Blockade

In another development, Bloomberg reported that the White House might bar government pension funds from investing in China. According to a CNBC report, the Trump administration might reduce US equity indexes’ exposure to Chinese companies. A reduction would have a negative impact on trade talks. Notably, the reductions might come into effect if the US-China trade talks fail, which could spook the US equity market. During the last week of September, Bloomberg reported that the US might delist Chinese companies. Also, ongoing social unrest in Hong Kong could halt the trade talks. The US accused China of civil rights violations.

Heavyweights

In today’s trade, the Dow Jones Industrial Average Index’s heavyweights in the industrial and tech sector, Boeing (BA) and Apple (AAPL) fell 1.9% and 0.4%. Boeing and Apple’s prices are sensitive to any new development in the trade talks. If the trade talks fail, the Trump administration might impose tariffs on Apple earlier than December. Any volatility in yuan could impact Boeing’s exports

Trump’s impeachment

A CBS News survey suggested that 23% of Republicans support the impeachment inquiry. A USA Today survey suggested that 30% are against President Trump on the Ukraine issue, according to CNBC. Democrats hold a majority in the House of Representatives. China could take advantage of political turmoil in the US. Impeachment might keep President Trump from winning a second term. China could delay the trade talks and wait for new leadership in the US.

Moving averages

Today, the Dow Jones Industrial Average Index is 2.5%, 1.2%, and 1% below its 20, 50, and 100-day moving averages. At the same time, the index is 1.2% above the 200-day moving average. The 50-day moving average is just 2.3% above the 200-day moving average. If the 50-day moving average falls below the 200-day moving average, the equity index could witness more weakness. When moving averages cross over  it’s called a “death cross.” Asset prices usually enter a bearish zone after the death cross.

Latest articles

Is the technology sector due for a correction? Twitter (TWTR) and Intel Corporation (INTC) will release their Q3 2019 stock earnings on October 24.

The Dow Jones Industrial Index (or DJIA) is trading just 2.2% below its all-time high. But is the stock bubble about to burst?

Renaissance Technologies had a strong investment in the healthcare sector in Q2 2019. The healthcare sector makes up 18.16% of the firm's total portfolio.

This week, semiconductor equipment suppliers Teradyne Inc. (TER) and Lam Research (LRCX) will report their quarterly earnings.

Major chip companies Texas Instruments (TXN) and Xilinx (XLNX) released their earnings last week and saw their stocks fall.

On October 18, CNBC reported Bill Gross top picks. His top stock picks were Annaly Capital (NLY), Invesco (IVZ) and Allergan (AGN).