Dow closes rocky session lower after 500-point drop
The Dow Jones Industrial Average closed lower on Tuesday after a volatile session that saw it rise more than 300 points before plunging more than 500 points over investor fears of a government shutdown.
The blue-chip index fell 53 points. The S&P 500 also fell, while the Nasdaq Composite rose slightly.
Shares initially climbed in morning trading on word that Beijing will cut American auto tariffs and that trade talks between the U.S. and China had restarted.
The news about tariffs lifted many U.S. auto stocks. Shares of auto parts suppliers like Johnson Controls were also higher.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GM | GENERAL MOTORS CO. | 58.52 | +2.85 | +5.13% |
| F | FORD MOTOR CO. | 11.18 | +0.38 | +3.47% |
| JCI | JOHNSON CONTROLS INTERNATIONAL PLC | 83.44 | -0.52 | -0.62% |
A proposal to cut China's tariffs on American cars to the 15 percent that other nations pay -- instead of the 40 percent now levied on U.S. autos -- has been submitted to China's cabinet, Bloomberg reported.
Meanwhile, a phone call was held Tuesday between Chinese Vice Premier Liu He and U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.
But as the session wore on, uncertainties about the effect of political conflicts on both sides of the Atlantic weighed on investor sentiment and equities began slipping.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 44296.51 | +426.16 | +0.97% |
| SP500 | S&P 500 | 5969.34 | +20.63 | +0.35% |
| I:COMP | NASDAQ COMPOSITE INDEX | 19003.651134 | +31.23 | +0.16% |
British Prime Minister Theresa May was struggling to save the Brexit deal and even hang on to her job. On Monday, she delayed a Parliamentary vote, scheduled for Tuesday, on the Brexit deal she negotiated with the European Union, admitting it would fail by a large margin.
The effect on companies and banks that do business in the U.K. of not reaching a deal by March 2019 is uncertain.
Meanwhile, a stunning, on-camera clash Tuesday in the White House between the president, Nancy Pelosi and Chuck Schumer, the Democratic leaders in the House and Senate, respectively, over border wall funding and a government shutdown raised the prospect of worsening Washington gridlock.
Trump insisted he's willing to let the government shut down if Congress doesn't approve funding for his U.S.-Mexico border wall.
The highly anticipated sit-down quickly escalated as Trump allowed the press to attend the start of it. Trump began by repeatedly telling Pelosi that what she's proposing would not pass the Senate.
Schumer then raised his voice as he claimed the Senate could pass measures to keep the government running regardless.
"If it's not good [on] border security, I won't take it," Trump shot back.
Asian stocks closed higher. Hong Kong stocks clawed back early losses to end up as Beijing confirmed that it is still in trade talks with Washington.
The Hang Seng index ended 0.1 percent higher.
China’s Shanghai Composite index closed up 0.4 percent.
Japan's Nikkei index closed down 0.34 percent.
In Europe, London’s FTSE closed up 1.7 percent after the pound stabilized following Monday's Brexit-related slide to 20-month lows after Prime Minister Theresa May postponed a key vote on how Britain will leave the European Union.
Germany’s DAX jumped 2 percent.
France’s CAC gained 2 percent, after French president Emmanuel Macron pledged late on Monday to raise the minimum wage and cut taxes in a bid to prevent more violent protests
Fox Business' Mike Obel contributed to this article.