The close: Wall Street falls on Tillerson exit, tariff worry
U.S. and European stock indexes slid on Tuesday as investors reacted to U.S. President Donald Trump’s ouster of Secretary of State Rex Tillerson, with the dollar and crude oil prices following suit.
Losses in technology stocks drove dips in the U.S. equity market, while oil prices – which lately have trended in tandem with equities – fell by as much as 1.8 per cent before regaining some ground, hurt by concerns over rising U.S. production.
Mr. Trump gave Mr. Tillerson the boot on Tuesday after a series of public rifts over policy on North Korea, Russia and Iran, and replaced his chief diplomat with loyalist Central Intelligence Agency Director Mike Pompeo.
The move had contributed to a volatile morning across asset classes, but markets were trending decidedly in the red by the afternoon.
U.S. crude fell 1.35 per cent to $60.53 per barrel and Brent was last at $64.40, down 0.85 per cent on the day.
Investors initially saw Mr. Tillerson’s firing as a sign that a deal on Iran’s nuclear program could collapse, potentially cutting Iran’s oil output, which supported prices. Fears about rising U.S. production were of more concern later in the day.
“There’s no stopping us and OPEC’s frustration levels are going to grow,” said Phillip Streible, senior market strategist at RJO Futures in Chicago, referring to efforts by major producers to curb output since last year.
U.S. production has reached a record, and weekly data last week showed overall U.S. output rising further, to more than 10.3 million barrels per day.
Wall Street dipped in the afternoon after seesawing through the morning.
The Dow Jones Industrial Average fell 171.99 points, or 0.68 per cent, to 25,006.62, the S&P 500 lost 17.73 points, or 0.64 per cent, to 2,765.29 and the Nasdaq Composite dropped 77.31 points, or 1.02 per cent, to 7,511.01.
The slide was driven by big losses in the tech industry, with shares of Microsoft, Facebook and Alphabet down more than 1.6 per cent, top losers on the S&P 500 and the Nasdaq.
Canada’s main stock index rose on Tuesday as gold producers advanced and comments from Bank of Canada Governor Stephen Poloz that indicated the central bank will remain cautious in policy decisions.
The Toronto Stock Exchange’s S&P/TSX composite index rose 42.35 points, or 0.27 per cent, to 15,647.14.
The head of the Bank of Canada said there remains a degree of untapped potential in the Canadian economy, particularly in the labour market, that means the country may be able to generate more growth without higher inflation.
The gold subsector rose 1 per cent as pot gold rose following the ouster of Mr. Tillerson.
Alamos Gold Inc. jumped 4 per cent to $6.57, while Centerra Gold was up 3.7 per cent to $7.10. Barrick Gold Corp rose 1.4 per cent to $15.81.
Energy stocks also increased despite the decline in oil prices, finishing up 0.5 per cent.
Encana Corp. increased 2.2 per cent to $14.22, and Suncor Energy Inc. was up 1.3 per cent to $42.29.
Equity markets had opened higher after the U.S. Labor Department announced its Consumer Price Index rose 0.2 per cent in February, in line with economists’ expectations – data that suggested the Federal Reserve remains on track to raise interest rates at a gradual pace this year.
But “there’s a lot of noise coming out of Washington over all these changes that’s causing the markets to really not focus,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York. European stocks closed down across the board. The pan-European FTSEurofirst 300 index lost 1.00 per cent and MSCI’s gauge of stocks across the globe shed 0.45 per cent.
Emerging market stocks rose 0.03 per cent.
The dollar index, which measures the greenback against a basket of currencies, fell 0.2 per cent, with the euro up 0.48 per cent to $1.2391.
In U.S. Treasuries, benchmark 10-year notes last rose 9/32 in price to yield 2.8389 percent, from 2.87 per cent late on Monday.