US open: Stocks turn in heavy losses at the bell as trade tensions remain firmly in focus
Wall Street stocks turned in heavy losses at the opening bell on Wednesday, driven by much weaker than expected economic data out of China and a report that Washington was not in fact easing back in its trade war with Beijing.
As of 1530 BST, the Dow Jones Industrial Average was down 1.76% at 25,817.20, while the S&P 500 was trading 1.78% lower at 2,874.36 and the Nasdaq Composite started the session 2.03% weaker at 7,853.84.
The Dow began the day 462.71 points lower after closing higher on Tuesday following Washington's decision to remove several items from its list of new Chinese tariffs, bouncing back from the sharp losses seen during the prior session.
The sudden shift in sentiment came as the yield on the benchmark 10-year Treasury note fell to 1.70%, leaving it only narrowly ahead of that on the two-year security at 1.67%, as investors turned toward safe-haven assets amid global growth concerns.
On Wednesday morning, both two and 10-year yields were at 1.58%, with the former having briefly risen above the latter.
Investors give the yield spread between the two a great deal of attention given that inversions had preceded every recession over the past 50 years.
But as ING noted: "Now it is important to point out that an inverted yield curve has given false signals in the past on possible US recessions (around the Russia/LTCM crisis in 1998 for example), while other countries have experienced prolonged yield curve inversion in the past without recession – the UK for example through much of the 1990s.
"As such it is important to emphasise the obvious point there is no inevitability of recession."
Gold pushed higher on the news, breaking past $1,506, as it cemented its recovery after Tuesday's sell-off.
Losses accelerated after CNBC reported that a senior US official had said that Washington's latest tariff reprieve was "not at all" an indication of a thaw in US-China relations.
Elsewhere, market focus was largely attuned to much softer-than-expected data from China.
In other news, China's Commerce Ministry also revealed overnight that Vice Premier Liu He had spoken with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin over the phone on Tuesday, with the trio agreeing to talk again in two weeks.
On the data front, US homeowners headed to their lenders at a rapid pace last week, with lower mortgage rates leading Americans to try and save money on their monthly payments.
Mortgage application volume jumped 21.7% last week-on-week, according to the Mortgage Bankers Association. On a yearly basis, volume soared 81%.
Meanwhile, import prices in the US edged slightly higher in July as energy costs bounced back.
According to the Bureau of Labor Statistics, the US import price index rose at a month-on-month pace of 0.2%, pushing the year-on-year rate of increase higher to -1.8%.
On the export side of the equation, prices were also 0.2% higher on the month, but 0.9% lower year-on-year.
In corporate news, Macy's, Canada Goose and Cisco Systems were all set to report earnings on Wednesday.