Market Report

Stocks fall as trade optimism gives way to concern

Harlem Globetrotters Donte “Hammer” Harrison (from left), Nathaniel “Big Easy” Lofton and Cherelle “Torch” George entertain traders Wednesday on the floor of the New York Stock Exchange before ringing the opening bell.
Harlem Globetrotters Donte “Hammer” Harrison (from left), Nathaniel “Big Easy” Lofton and Cherelle “Torch” George entertain traders Wednesday on the floor of the New York Stock Exchange before ringing the opening bell.

Stocks closed broadly lower Wednesday as investors turned anxious about the possibility that the U.S. and China may not reach a trade deal before next year.

Technology stocks took the heaviest losses. Communication services and industrial stocks also were big losers. Banks fell as bond yields declined. Energy stocks notched the biggest gains as crude oil prices rebounded.

The selling nudged the major U.S. stock indexes off their recent record highs.

The S&P 500 index dropped 11.72 points, or 0.4%, to 3,108.46. The Dow Jones Industrial Average lost 112.93 points, or 0.4%, to 27,821.09. The index was briefly down 258 points.

The Nasdaq slid 43.93 points, or 0.5%, to 8,526.73. The Russell 2000 index of smaller-company stocks gave up 6.68 points, or 0.4%, to 1,591.61.

Major stock indexes in Europe also closed lower.

A published report on the U.S.-China trade talks suggested a "phase one" trade pact may not be completed this year as negotiators continue to wrestle over differences. Beijing is pressing Washington to agree to broader tariff rollbacks on Chinese goods, the report said.

The Senate may have complicated the path to a deal Wednesday, when it approved a resolution in support of human rights in Hong Kong after months of anti-government protests in the city. China condemned the move and threatened "strong countermeasures."

Investors have been hoping the world's two biggest economies can make a deal before new tariffs take effect Dec. 15 on about $160 billion in Chinese imports. Those duties would cover smartphones, laptops and other consumer goods.

"If a deal is not going to get done before the end of the year, then all of a sudden this uncertainty comes back in around what's going to happen around Dec. 15," said Scott Ladner, chief investment officer at Horizon Investments. "Are the tariffs back on the table again? The market has certainly come to expect that those are not going to happen."

Growing optimism among investors that the U.S. and China were making progress toward a limited trade deal helped pave the way for gains in the market in recent weeks, including a string of record highs for the major stock indexes.

That optimism dimmed Wednesday as investors weighed the implications of more tariffs kicking in next month.

The two countries have raised tariffs on billions of dollars of each other's goods in the fight over China's trade surplus and technology ambitions. That weighs on trade worldwide and threatens to depress corporate earnings and global economic growth, which has already shown signs of slowing.

President Donald Trump said Tuesday that he was prepared to raise tariffs if the nations can't reach an agreement on trade.

Technology and communication services companies were among the biggest losers Wednesday. HP shares fell 2%, and AT&T slid 2.2%.

Citigroup dropped 1.2% as financial stocks fell along with bond yields. The yield on the 10-year Treasury slid to 1.74% from 1.78% late Tuesday. Falling bond yields hurt banks because they are a benchmark for the interest rates that lenders charge on mortgages and other loans.

Energy companies held up better than the rest of the market as oil prices climbed 3.4%. ConocoPhillips shares rose 3.8%.

Benchmark crude oil rose $1.90 to settle at $57.11 a barrel. Brent crude oil, the international standard, gained $1.49 to close at $62.40 a barrel.

Utilities, real estate companies and makers of household goods also rose as traders favored less-risky and higher-dividend stocks.

Information for this article was contributed by Damian J. Troise of The Associated Press.

Business on 11/21/2019

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