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Wall Street drops on weak factory activity, tariffs on metal imports

Kitco News

(Reuters) - U.S. stocks fell on Monday after President Donald Trump decided to restore tariffs on metal imports from Brazil and Argentina, and weak factory activity fanned worries of a slowing domestic economy due to a long-drawn trade war with China.

The U.S. manufacturing sector contracted for a fourth straight month in November and construction spending unexpectedly fell in October.

The reports follow last week’s data that showed a slight pickup in third-quarter economic growth and a steady rise in consumer spending in October.

Earlier in the day, markets gained on an unexpected rebound in Chinese manufacturing activity in November. But the upbeat sentiment was dampened by Trump’s tweet about restoring tariffs on steel and aluminum imports, which surprised officials in Brazil and Argentina who sought explanations.

Shares of U.S. steel makers, however, rose.

“It is all about the macro news today and that is basically overshadowing the good news on Black Friday and Cyber Monday,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“The fact that the manufacturing sector is still in recession obviously also rekindles trade worries.”

A senior adviser to Trump said on Monday a deal with China was still possible before the end of the year, adding that the first phase of the agreement was being put to paper.

Hopes of a trade truce had helped Wall Street scale record levels last month.

“We are coming off the market high ... any negative news is going to cause investors to take profits,” Cardillo said.

At 12:51 p.m. ET, the Dow Jones Industrial Average .DJI was down 237.30 points, or 0.85%, at 27,814.11, the S&P 500 .SPX was down 26.76 points, or 0.85%, at 3,114.22 and the Nasdaq Composite .IXIC was down 107.68 points, or 1.24%, at 8,557.80.

Retail stocks were in focus, with Cyber Monday sales on course to bring in a record $9.4 billion. However, the sector .SPXRT was down 1.22%.

Energy sector .SPNY rose 0.10%, tracking oil prices. The other 10 major S&P 500 sectors were trading lower. The technology sector .SPLRCT slipped 1.43% and was the biggest drag. [O/R]

Among other stocks, Roku Inc (ROKU.O) tumbled 14.45% after Morgan Stanley downgraded its shares.

Declining issues outnumbered advancers for a 2.71-to-1 ratio on the NYSE and for a 2.76-to-1 ratio on the Nasdaq.

The S&P index recorded 16 new 52-week highs and two new lows, while the Nasdaq recorded 58 new highs and 30 new lows.

Reporting by Arjun Panchadar and Sanjana Shivdas in Bengaluru; Editing by Saumyadeb Chakrabarty, Shounak Dasgupta and Arun Koyyur

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