Stock market news: October 8, 2019

All three of the major indices fell by more than 1% Tuesday, extending declines from Monday as investors continued to monitor the escalating trade tensions between the U.S. and China.

Here’s where the markets settled by the end of regular trading Tuesday.

  • S&P 500 (^GSPC): -1.56%, or 45.77 points

  • Dow (^DJI): -1.19%, or 314.45 points

  • Nasdaq (^IXIC): -1.67%, or 132.52 points

  • Crude oil (CL=F): -0.19% to $52.63 per barrel

  • Gold (GC=F): +0.45% to $1,511.10 per ounce

Tuesday afternoon, the Trump administration implemented travel bans on Chinese officials tied to the alleged human rights abuses in China’s Xianjiang. Stocks immediately fell following the news from the State Department. Just prior, stocks had pared some losses after Federal Reserve Chair Jerome Powell said in a speech the central bank was set to resume growth of its balance sheet “soon” amid recent volatility in overnight repurchase market rates.

Concerns over U.S.-China trade tensions have re-escalated throughout the week. Before the State Department’s travel ban announcement, the Trump administration added eight Chinese companies and 20 Chinese public security bureaus to the U.S. blacklist, over allegations that the organizations were involved in human rights abuses in China’s Xinjiang region.

Two companies on the list include video surveillance companies Hikvision and Dahua Technology. The American chipmakers took a big hit on the announcement, with shares of Ambarella (AMBA) sinking more than 10% Monday morning. Ambarella makes processors for cameras and surveillance equipment and conducts business with Hikvision. It is not clear how much of Ambarella’s revenue comes from business with Hikvision, but management previously warned that intensifying trade tensions is creating an uncertain business environment, and thus, would likely have a negative impact on business.

China has indicated that it intends to hit back. When asked whether or not China intends to retaliate against the U.S. blacklist, Geng Shuang, China’s foreign ministry spokesman, told reporters to “stay tuned.” Shuang also denied any human rights abuses in Xinjiang. He also said that the U.S. should immediately correct its mistake and stop interfering with China’s internal affairs.

The growing tensions come as high-level trade negotiators from the U.S. and China are scheduled to meet in Washington at the end of this week. As of now, the trade negotiations are still expected to take place as scheduled.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., September 23, 2019. REUTERS/Brendan McDermid
Traders work on the floor at the New York Stock Exchange (NYSE) in New York. REUTERS/Brendan McDermid

STOCKS: Boeing to invest $20 million in Virgin Galactic; Domino’s Pizza tumbles on earnings

Shares of industrial behemoth Boeing (BA) were lower Tuesday after the company announced that it would invest $20 million for a minority stake in Virgin Galactic. In a joint statement, the companies said that the strategic partnership will allow them to “work together to broaden commercial space access and transform global travel technologies.”

“Boeing's strategic investment facilitates our effort to drive the commercialization of space and broaden consumer access to safe, efficient, and environmentally responsible new forms of transportation,” Brian Schettler, senior managing director of Boeing HorizonX Ventures, said in a statement. “Our work with Virgin Galactic, and others, will help unlock the future of space travel and high-speed mobility.”

This investment comes as Boeing deals with continued fallout from its 737 MAX jets. Most recently, disagreements between U.S. and European regulators threatened to further delay the return of the 737 MAX, and a union representing Southwest Airlines (LUV) pilots sued Boeing. The pilots argue that Boeing rushed out the 737 MAX jet and neglected to share key information about a feature that contributed to the deadly accidents.

Domino’s Pizza (DPZ) shares reversed earlier losses and rose 4% Tuesday after the pizza chain reported a miss on the top and bottom lines and weaker-than-expected same-store sales growth both in the U.S. and internationally.

The pizza giant missed U.S. same-store sales growth expectations for the fourth consecutive quarter, as competition in the fast-food space continues to heat up. Domino’s also updated its long-term guidance and now expects U.S. same-stores sales growth between 7% to 10% over the next two to three years. It previously anticipated same-store sales growth between 8% and 12% over a three to five year period.

Meanwhile, internationally, Domino’s sees same-store sales growth between 1%-4% over a two to three year period. Previously, the company expected 3% to 6% same-store sales growth over the next three to five years.

ECONOMY: U.S. producer prices falls unexpectedly in September; Small business optimism declines in September

The producer price index (PPI) for final demand unexpectedly dropped 0.3% in September, missing economists’ estimates for a 0.1% increase. It was the largest decline in PPI since January. Excluding volatile food, energy and trade, PPI was unchanged during the month, after rising 0.4% in August. The weaker-than-expected PPI data could give the Federal Reserve a better case to cut rates.

Sentiment among small business owners in the U.S. fell 1.3 points to 101.8 in September, according to The National Federation of Independent Business (NFIB). Analysts were expecting a reading of 103.1. Though by historical standards, sentiment is high, September’s decline was the third drop out of the last four months. The NFIB noted that the Uncertainty Index rose 6 points over the past three months.

“As more owners become unsure, caution will seep into business decisions. In addition to tariff concerns, the Fed’s decision to cut interest rates raised uncertainty,” NFIB Chief Economist William Dunkelberg said in a statement. “Perhaps the country will indeed talk itself into a recession, but not anytime soon. The persistence of unfilled job openings and reports of a deficiency of job applicants indicate that there is still substantial economic optimism about the economy on Main Street.”

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Yahoo Finance All Markets Summit

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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