U.S. markets crashed on Monday morning following weaker-than-expected manufacturing data. The markets were also weighed down by concerns over trade matters after U.S. President Donald Trump said the U.S. would restore tariffs on certain metals.
The Dow Jones Industrial Average fell by 205 points or 0.73% on midday Monday. The S&P 500 declined by 22.35 points or 0.71%, while the Nasdaq Composite sharply retreated by 94.33 points or 1.1%.
Data on the U.S. manufacturing sector indicated that it contracted for the fourth consecutive month, with the Institute for Supply Management’s purchasing manager’s index unexpectedly falling to 48.1% in November from 48.3% in October. Economists expected a reading of 49.2%. Readings below 50% reflect business conditions worsening, according to MarketWatch.
“The small decline in the ISM manufacturing index . . . left it close to a decade low and illustrates that the manufacturing sector isn’t out of the woods,” wrote Andrew Hunter, senior U.S. economist at Capital Economics, in a Monday note. “Manufacturing output looks set to rebound in November specifically as the GM strike disruption in the auto sector unwinds, but this latest ISM weakness suggests that underlying conditions in the sector remain unusually weak.”
U.S. stocks also turned bearish after Trump decided to restore tariffs on steel and aluminum shipped into the U.S. from Brazil and Argentina.
Trump accused Brazil and Argentina of “presiding over a massive devaluation of their currencies, which is not good for our farmers,” tweeted Trump. Effective immediately, Trump decided to restore the tariffs imposed on the two countries.
On Sunday, China insisted on the U.S. tariffs be rolled back as part of the “phase one” trade agreements, according to China’s state-run Global Times. However, Axios said that a deal is unlikely to be agreed upon before late December, but Trump is expected to put off tariff hikes scheduled to take effect on December 15 to keep negotiations alive, according to MarketWatch.