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23-Jan2019

US markets end lower as growth concerns resurface

The US markets ended lower on Tuesday on renewed concerns about global growth and the US-China trade war. The International Monetary Fund (IMF) said the global expansion is weakening at a rate that is somewhat faster than expected. The IMF lowered its forecasts for global economic growth to 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage points below last October's projections. The IMF said an escalation of trade tensions and a worsening of financial conditions are key sources of risk to the outlook. The IMF also expressed concerns about a bigger than expected slowdown in Chinese growth, the Brexit cliffhanger, and the ongoing US government shutdown. Besides, stocks were battered by reports that US turned down an offer by China to hold a preparatory meeting on trade negotiations due to a lack of progress in areas including forced technological transfers and economic reforms.

On the economic front, the National Association of Realtors (NAR) released a report showing a much steeper than expected drop in US existing home sales in the month of December. NAR said existing home sales plummeted by 6.4 percent to an annual rate of 4.99 million in December after jumping by 2.1 percent to a revised rate of 5.33 million in November. Street had expected existing home sales to slump by 1.3 percent to a rate of 5.25 million from the 5.32 million originally reported for the previous month. With the much bigger than expected decrease, existing home sales tumbled to their lowest level since November of 2015. The report also said existing home sales in December were down by 10.3 percent compared to an annual rate of 5.56 million in the same month a year ago.

Dow Jones Industrial Average plunged 301.87 points or 1.22 percent to 24404.48, Nasdaq declined 136.87 points or 1.91 percent to 7020.36 and S&P 500 was down by 37.81 points or 1.42 percent to 2632.90.


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