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* All 3 major indexes close lower as Trump announces new
tariffs
* 10-year Treasury yields dip to more than 2-1/2-year low
* GM, Kellogg, Verizon, Yum Brands post upbeat earnings
* U.S. manufacturing grows at slowest pace in nearly 3 years
* Indexes down: Dow 1.05%, S&P 500 0.90%, Nasdaq 0.79%
(Updates to market close)
By Stephen Culp
NEW YORK, Aug 1 (Reuters) - Wall Street fell again on
Thursday, abruptly reversing early gains after U.S. President
Donald Trump put concerns about the U.S.-China trade war back in
the spotlight, tweeting that he would impose an additional 10%
tariff on $300 billion in Chinese imports.
Having spent most of the session on track for their best day
since June, all three major U.S. stock indices took sudden
U-turns as investors quickly turned into sellers after the
tweet. The bond market rallied on Trump's comment, prompting U.S.
Treasury yields into their steepest drop in over a year. The
benchmark 10-year yield fell to its lowest level since November
2016. The CBOE Volatility Index .VIX , a gauge of investor
anxiety, shot to its highest reading since June 4.
"The biggest issue for investors to realize is that this is
systemic and is going to be an ongoing issue between the U.S.
and China," said Joseph Quinlan, head of chief investment office
market strategy for Merrill and Bank of America Private Bank in
New York.
"The markets don't like uncertainty and this is a bolt from
the blue in terms of uncertainty."
The sell-off comes on the heels of the U.S. Federal
Reserve's first interest rate cut in a decade, and remarks from
Fed chief Jerome Powell that tempered expectations for further
cuts this year, cuts Trump has been vocal about supporting.
"It looks like the president is bullying the chairman of the
Federal Reserve in order to wage his trade war," said Michael
O'Rourke, chief market strategist at Jonestrading in Greenwich,
Connecticut. "The market should not appreciate that."
Earlier in the session, Wall Street got a boost from a
string of positive earnings from a wide range of companies,
including General Motors Co GM.N , Kellogg Co K.N , Verizon
Communications Inc VZ.N and Yum Brands Inc YUM.N , among
others.
In economic news, the U.S. manufacturing sector expanded in
July at its slowest pace in almost three years, according to the
Institute for Supply Management's purchasing manager index
(PMI).
Investors now look to Friday's release of the Labor
Department's closely-watched jobs report.
The Dow Jones Industrial Average .DJI fell 280.85 points,
or 1.05%, to 26,583.42, the S&P 500 .SPX lost 26.82 points, or
0.90%, to 2,953.56 and the Nasdaq Composite .IXIC dropped
64.30 points, or 0.79%, to 8,111.12.
Of the 11 major sectors in the S&P 500, eight closed in
negative territory, with financials .SPSY , energy .SPNY and
trade-sensitive industrials .SPLRCI seeing the biggest
percentage losses.
Second-quarter earnings season continues at full throttle,
with 355 of S&P 500 companies having reported. Of those, 74.4%
have bested Street estimates, according to Refinitiv data.
Analysts now see S&P 500 earnings growth of 2.5%, up from
just 0.3% a month ago, per Refinitiv.
Pick-up trucks and SUVs drove General Motors' second-quarter
profit beat, but the automaker's stock turned negative after the
Trump tweet, ending the session down 0.5%.
Kellogg surged 9.3% as higher North American demand helped
the packaged food company beat second-quarter estimates.
Shares of Yum Brands Inc jumped 3.9% after beating analyst
profit and sales expectations on better-than-expected growth at
all its restaurant chains, which include Taco Bell and Pizza
Hut. Declining issues outnumbered advancing ones on the NYSE by a
1.87-to-1 ratio; on Nasdaq, a 2.23-to-1 ratio favored decliners.
The S&P 500 posted 28 new 52-week highs and 11 new lows; the
Nasdaq Composite recorded 76 new highs and 136 new lows.
Volume on U.S. exchanges was 9.89 billion shares, compared
with the 6.48 billion average over the last 20 trading days.