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U.S. Stock Indexes Drop As Global Recession Fears Grow

U.S. stock indexes took a hard turn south in morning trade Thursday. Stock analysts worried that the U.S.-China trade war could lead to a global recession. Meanwhile, China's foreign ministry spokesman Lu Kang said China hopes to restart trade talks.

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The Nasdaq and the blue chip Dow Jones Industrial average dropped nearly 1.8% and 1.6% respectively, trading at session lows. The large cap S&P 500 sliced off 1.3%. Small caps in the Russell 2000 fell almost 1.9%.

Volume in the stock market today ran sharply higher on both major exchanges vs. the previous session.

Morgan Stanley set the morning's negative tone when analysts predicted that without a U.S.-China trade deal "we see the global economy heading toward recession," CNN reported.

Lu Kang, China's foreign ministry spokesman, sounded a more optimistic note. Lu said China is open to restarting talks but any agreement must be based "on mutual respect, equality and mutual benefit," The Associated Press reported.


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On the technical front in the stock market, the Nasdaq undercut its May 13 low. The low reset the Nasdaq's attempted rally at zero. Going into today's market, the count was at Day 7. The undercut means the Nasdaq is not anywhere near confirming a new uptrend.

The S&P 500, though, has not undercut its May 13 low but is coming close.

Crude Oil Prices Slide

Oil prices weakened sharply Thursday. Analysts blamed trade tensions and a rising U.S. supply.

West Texas intermediate crude oil chopped off 5%, taking a number of oil stocks with it. In the blue chip Dow Jones, Chevron (CVX) and Exxon Mobil (XOM) dropped about 2% each.

Oil and gas explorer Continental Resources (CLR) gapped down almost 6%. Concho Resources (CXO) slid about 6.5%.

Field services provider Halliburton (HAL) lost more than 5%.

Quarterly Results

Companies reporting quarterly results showed varied reactions.

Cardiac device developer Medtronic (MDT) topped the Street's consensus view by almost 5%. The stock gapped up 3% early and then eased to a 2% gain. Medtronic ran into resistance at its 200-day moving average.

Retailer Best Buy (BBY) stomped the consensus estimate by 17% but warned that tariffs could hurt the company. The stock dropped about 6% early and then recovered partly to a 4.5% loss.

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