Stocks tumbled on Tuesday after House Speaker Nancy Pelosi landed in Taiwan’s capital Taipei high pressure standoff with china, He and other members of Congress were greeted on the tarmac by a contingent of Taiwanese officials.
In a statement shortly after the plane landed, Pelosi said her visit was to honor “the United States’ unwavering commitment to supporting Taiwan’s vibrant democracy.”
The S&P 500 closed 27 points, or 0.7%, down at 4,091. The Dow Jones Industrials declined 1.2% and the Nasdaq was down 0.2%.
“Speaker Pelosi’s visit to Taiwan opens an alarming period for US-China-Taiwan tensions that will escalate and increase market risks,” analysts Raymond James Equity Research and Alex Anderson said in a report. “We expect an ongoing series of responses by China in the coming days and weeks, but the overall trajectory is likely to avoid significant escalation in our view.”
China sees Taiwan as its territory and has repeatedly warned of “serious consequences” if an alleged visit by the Speaker of the House to the island democracy, who is second in the line of US presidential succession, goes ahead. . Pelosi has said she is visiting Singapore, Malaysia, South Korea and Japan for talks on a variety of topics, including trade, COVID-19, climate change and security.
Pelosi is the highest-ranking US official elected to the post in more than 25 years.
Meanwhile, high inflation coupled with the prospect of further hikes in interest rates from central banks is dragging on markets that could inadvertently push economies into recession.
More than half of the companies in the S&P 500 have reported their latest earnings results, which have mostly been better than expected. However, companies have also warned that the impact of inflation is putting pressure on customer spending and operations. Businesses are raising prices to try to maintain profits.
The jump in oil prices throughout the year only worsened the effects of inflation. US crude oil prices have increased by about 25% in 2022 and this has pushed gasoline prices in the US to record levels.
Uber jumped nearly 19%, the ridesharing company said, adding that rides grew 24% and revenue more than doubled in the second quarter as Americans moved back to offices and as concerns over COVID-19 going out more.
BP shares rose 1% after the British energy giant reported that its earnings tripled in the second quarter due to rising oil and natural gas prices after Russia invaded Ukraine.
Wall Street is also preparing for an update on the job market, which remains strong. The Labor Department will release its closely watched monthly employment report for July on Friday.
In energy trading, benchmark US crude rose 67 cents to $94.56 a barrel in electronic trading on the New York Mercantile Exchange. Internationally, Brent crude rose 52 cents to $100.55 a barrel.