Wall Street drops as cost pressures rise, oil prices retreat
U.S. stocks fell on Tuesday, dragged down by Pfizer results, tumbling oil prices and growing fears that tariffs and inflation would weigh on corporate profits.
Data showed U.S. factory activity slowed for a second straight month in April, weighed down by shortages of skilled workers and rising capacity constraints, but strengthening global demand continued to support manufacturing.
However, the Institute for Supply Management survey also showed a jump in raw material costs, with steel and other prices increasing due to tariffs imposed by the Trump administration.
On Monday, President Donald Trump postponed the imposition of steel and aluminum tariffs on Canada, the European Union and Mexico until June 1, and reached agreements for permanent exemptions for Argentina, Australia and Brazil.
While corporate profits are expected to have notched their best growth in seven years in the first quarter, largely due to lower taxes, investors have focused on increasing warnings of cost pressure.
"I think a lot of data is pointing to 2018 being a peak from many points of view," said Mona Mahajan, U.S. investment strategist at Allianz Global Investors in New York.
"What`s concerning is beyond this year, the momentum will slow. We`re starting to see and what the market is starting to realize is a combination of perhaps the peak in momentum from earnings and economic perspective, combined with late-cycle rate-rising environment."
At 11:37 a.m. ET the Dow Jones Industrial Average was down 252.45 points, or 1.04 percent, at 23,910.70, the S&P 500 was down 12.66 points, or 0.48 percent, at 2,635.39 and the Nasdaq Composite was down 6.96 points, or 0.10 percent, at 7,059.31.
Seven of the 11 major S&P sectors were lower, with a 1.2 percent drop in the industrial sector the biggest.
The energy sector fell 1.1 percent following a drop of more than 1.5 percent in crude oil prices as the dollar remained near a four-month high ahead of the Federal Reserve meet.
Pfizer fell 4.7 percent, the most on the Dow, after posting its biggest miss on quarterly revenue in a year, on disappointing sales of some blockbuster drugs.
The technology sector was up 0.32 percent. Apple was up about 1 percent ahead of its quarterly report after the bell.
Declining issues outnumbered advancers for a 2.42-to-1 ratio on the NYSE and for a 1.96-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 26 new lows, while the Nasdaq recorded 24 new highs and 64 new lows.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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