Travelers, McDonald's stocks exact 150–point toll on Dow as broader stock market ends lower amid political clouds

U.S. stock indexes skidded lower into Tuesday’s close, amid negative headlines on Brexit and reports related to President Donald Trump’s impeachment inquiry. The Dow Jones Industrial Average DJIA, -0.15% closed nearly 40 points, or 0.2%, lower at 26,788, with a post-earnings skid for shares of Travelers Cos. Inc. TRV, -8.29%, off $11.76, or 8.3%, and McDonald’s Corp. MCD, -5.04%, down $10.58, or 5%, combining to deliver a 151-put headwind to the blue-chip index. Meanwhile, the S&P 500 index SPX, -0.36% closed down 0.4% at 2,996, slipping below a psychologically significant level at 3,000, while the Nasdaq Composite Index COMP, -0.72% finished 0.7% lower at 8,104. All closing levels are on a preliminary basis. The Wall Street Journal and others reported that U.S. diplomat Kurt Volker told the Ukrainian president he needed to convince Trump he was willing to investigate corruption and alleged Ukrainian 2016 election interference against former Vice President Joe Biden and his son, said the paper, citing people familiar with the former envoy’s recent testimony to Congress. The disclosures may intensify the Congressional investigation into allegations that Trump withheld federal funds in exchange for a probe into a political rival. Separately, investors focused on on Brexit after U.K. lawmakers endorsed Prime Minister Boris Johnson’s plan to leave the EU but voted against a fast-track plan that would have seen the country leave the trade bloc by Oct. 31, increasing some uncertainty around Brexit.

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Dow flat despite losses for Travelers, McDonald's stocks

Shares of Travelers and McDonald’s are posting losses Tuesday afternoon, though the Dow Jones Industrial Average is trading essentially flat. The Dow DJIA, -0.15% was most recently trading 2 points, or 0.0%, lower, as shares of Travelers TRV, -8.29% and McDonald’s MCD, -5.04% account for -53% of the blue-chip gauge’s intraday losses. Travelers’s shares have fallen $11.65 (8.2%) while those of McDonald’s have fallen $9.40 (4.5%), combining for a roughly 143-point drag on the Dow. Also contributing significantly to the decline are Merck MRK, -3.81%, Visa V, -3.16%, and Microsoft MSFT, -1.49%. A $1 move in any of the benchmark’s 30 components results in a 6.78-point swing.

Editor’s Note: This story was auto-generated by Automated Insights using data from Dow Jones and FactSet. See our market data terms of use.

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Here’s why the stock market is so sensitive to tweets and political headlines right now

If it feels like the stock market and other financial assets are jumping and falling in reaction presidential tweets and news headlines to an unusual degree, it isn’t your imagination, argues one investor.

“Today’s markets are whipsawed by political slings and arrows, often in the form of tweets or breaking news reports. And ‘investors’ increasingly are reacting impulsively to a reality that’s shifting minute-by-minute,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company, in a Monday note. “Put differently, broad swaths of equities can flip from winners to losers in an incredibly short time period — perhaps in the wake of a single tweet.”

‘We believe politics inordinately captures the market’s attention because it’s the only reason that a recession could ensue in the coming months.’

Brent Schutte, Northwestern Mutual

Read: The more Trump tweets, the worse it is for stocks, research finds

Schutte acknowledged that to say that investors don’t like uncertainty is to repeat a cliché. After all, when is life predictable?

But now that social scientists have devised methods to attempt to measure uncertainty, market watchers feel more comfortable quantifying uncertainty — and right now, by one such measure, that uncertainty is running at near historical levels after rising to just below an all-time high in August (see chart below).

Northwestern Mutual Wealth Management Company

Schutte highlighted the U.S. Economic Policy Uncertainty Index, devised by economists Scott Baker of Northwestern University, Nick Bloom of Stanford University and Steven Davis of the University of Chicago, which draws on search results from 10 large U.S. newspapers, reports by the Congressional Budget Office that compile tax code provisions due to expire over the next 10 years, and the Philadelphia Fed’s survey of professional forecasters.

Need to Know: New S&P 500 highs are riding on

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Stock investors can’t ignore politics because it’s ‘the only reason’ a recession is a threat

If it feels like the stock market and other financial assets are jumping and falling in reaction presidential tweets and news headlines to an unusual degree, it isn’t your imagination, argues one investor.

“Today’s markets are whipsawed by political slings and arrows, often in the form of tweets or breaking news reports. And ‘investors’ increasingly are reacting impulsively to a reality that’s shifting minute-by-minute,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company, in a Monday note. “Put differently, broad swaths of equities can flip from winners to losers in an incredibly short time period — perhaps in the wake of a single tweet.”

‘We believe politics inordinately captures the market’s attention because it’s the only reason that a recession could ensue in the coming months.’

Brent Schutte, Northwestern Mutual

Read: The more Trump tweets, the worse it is for stocks, research finds

Schutte acknowledged that to say that investors don’t like uncertainty is to repeat a cliché. After all, when is life predictable?

But now that social scientists have devised methods to attempt to measure uncertainty, market watchers feel more comfortable quantifying uncertainty — and right now, by one such measure, that uncertainty is running at near historical levels after rising to just below an all-time high in August (see chart below).

Northwestern Mutual Wealth Management Company

Schutte highlighted the U.S. Economic Policy Uncertainty Index, devised by economists Scott Baker of Northwestern University, Nick Bloom of Stanford University and Steven Davis of the University of Chicago, which draws on search results from 10 large U.S. newspapers, reports by the Congressional Budget Office that compile tax code provisions due to expire over the next 10 years, and the Philadelphia Fed’s survey of professional forecasters.

Need to Know: New S&P 500 highs are riding on

Read More Here...