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Dow, S&P 500 Stocks Slide On Trump Trade Threats, Chaos In Italy

U.S. stocks indexes retreated near midday Tuesday, as chaos in Italy dragged down European stocks and President Trump dowsed U.S. stocks with more talk of a crackdown on China’s trade practices.

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The Dow Jones industrial average sagged 0.6%, while the S&P 500 and the Nasdaq slouched 0.6% and 0.2%, respectively. The S&P SmallCap 600 was barely above the break-even line.

Volume fell on the Nasdaq but rose on the NYSE compared to the same time Friday. Markets in the U.S. and the United Kingdom were closed Monday.

Jitters In Italy

Indexes in Europe ended with losses of more than 1% on fears that populism was taking hold in Italy. In China, the Shanghai composite dropped 0.5%, down for a fifth session in a row. Hong Kong’s Hang Seng Index fell 1%, while Japan’s Nikkei 225 index lost 0.6%

Among IBD’s 197 industry groups, losers led winners by a 2-1 ratio.

The morning’s top losers included bank and financial groups. Leading gainers were mostly low-rated groups, such as food, homebuilders and chip-equipment makers.

Some Breakouts Flawed

Breakouts picked up but only a few attracted strong volume.

Tech stock Micron Technology (MU) cleared a cup pattern in twice its usual volume. The stock rose 4%, passing a 63.52 buy point. The pattern is late stage, according to MarketSmith’s pattern-recognition technology.

As a stock rises, it pauses to consolidate. A breakout from a first or second consolidation is more likely to work than those from later patterns.

The Street expects Micron to grow earnings 133% in fiscal 2018 ending in August.

Advanced Drainage Systems (WMS) stabbed 13% higher in torrid volume. The thinly traded stock leapt over a 28.25 buy point. The pattern is first stage.

ON Semiconductor (ON) crept above a 26 buy point in a double-bottom pattern but then retreated under the entry.

Stocks crossing above buy points in average to soft volume included infrastructure play Martin Marietta Materials (MLM), casino operator Las Vegas Sands (LVS) and footwear maker Crocs (CROX).

(For updates on this story and other market coverage, check IBD’s stock market news today.)

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