The US stock market finished session significantly down on Tuesday, 02 August 2022, as risk off mood intensified amid rising tensions between the two economic superpowers ahead of planned visit by U.S. House of Representatives Speaker Nancy Pelosi to Taiwan. Meanwhile, signs of slowing global growth and hawkish comments from a couple of Federal Reserve officials also weighed on sentiment.
At the close of trade, the Dow Jones Industrial Average index declined 402.23 points, or 1.23%, to 32,396.17. The S&P500 index dropped 27.44 points, or 0.67%, to 4,091.19. The tech-heavy Nasdaq Composite Index decreased by 20.22 points, or 0.16%, to 12,348.76.
All 11 S&P500 sectors closed lower, with real estate issue suffered largest percentage loss, falling 1.3%, followed by financials (down 1.07%), industrials (down 1.05%), materials (down 1%), and information technology (down 0.7%) issues.
Stocks were in negative territory throughout the day as investors sought safer assets on caution ahead of Pelosi's potential arrival in Taiwan during her trip to Asia. Pelosi is expected to land in Taiwan later this morning, and the expected arrival of the number three US official has angered China considerably in recent days.
China, which regards Taiwan as a renegade province awaiting reunification with the mainland, by force if necessary, has warned that Pelosi's visit would escalate bilateral tensions. China has been seeking a reunification with Taiwan for decades.
The United States said on Monday that it would not be intimidated by Chinese sabre rattling over the visit. The White House has warned China against turning her visit into a crisis.
Taiwan is a key manufacturer of semiconductor chips that power everything from phones to cars, and its untenable relationship with China is one reason why Congress passed the CHIPS act last month, a $280 billion package that incentivizes the onshoring of semiconductor manufacturing in America.
The Taiwan issue added to a sense of unease sparked by China, Europe and the United States on Monday reporting weakening factory activity, with that in the United States decelerating to its lowest level since August 2020.
Caterpillar shares closed nearly 6% down, after reporting lower than expected earnings for June quarter. The company reported net profit of $1.67 billion for second-quarter ended June 2022, compared to $1.41 billion a year ago. Revenue for the quarter rose 10.6% to $14.25 billion from $12.89 billion last year.
Dupont shares drifted down 2.7%, weighed down by a downward revision in the company's full-year outlook.
Uber Technologies shares soared nearly 19% after the company said that gross bookings reached an all-time high of $29.1 billion in the second quarter ended June 2022, up 33% over the corresponding quarter last year. Uber also expects gross bookings of $29 billion to $30 billion for the third quarter of this financial year.
Pinterest shares surged 12.25%, buoyed by reports that Elliott Investment Management becoming the largest shareholder of the company.
Among Indian ADR, Tata Motors fell 0.72% to $30.36, INFOSYS dropped 0.66% to $19.49, HDFC Bank fell 1.6% to $62.08, Dr Reddy's Labs shed 0.2% to $51.38, ICICI Bank declined 0.24% to $20.68, and WNS Holdings fell 0.81% to $85.86. Wipro added 0.19% to $5.37 and Azure Power Global added 1.7% to $12.
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