A modest rally faded in the last few minutes of trading Wednesday, leading to small losses for most of the stock indexes ahead of the next round of trade talks between the U.S. and China.
The late-afternoon reversal added to the market's losses after a steep sell-off a day earlier. Investors have worried that the costly trade dispute between the world's two biggest economies will escalate.
The S&P 500 index fell 4.63 points, or 0.2%, to 2,879.42. The benchmark index had been up 0.5%.
The Dow Jones industrial average inched up 2.24 points, or less than 0.01%, to 25,967.33. The Nasdaq composite dropped 20.44 points, or 0.3%, to 7,943.32.
The Russell 2000 index of small-company stocks slid 7.34 points, or 0.5%, to 1,574.97.
Financial markets turned volatile this week after President Donald Trump threatened to impose more tariffs on Chinese goods. Negotiations between the U.S. and China are scheduled to be held in Washington today, and they will include China's top trade official.
Trump said on Twitter that China is coming "to make a deal" but that he'll still be ready to raise tariffs Friday if the negotiations fail to produce an agreement.
That appeared to give the market a boost, but it didn't last.
"Investors are concerned that a deal may not be forthcoming," said Quincy Krosby, chief market strategist at Prudential Financial. "You don't want to be caught off-guard by perhaps a negative comment out of Beijing overnight or, for that matter, the White House."
Major stock indexes in Europe closed with modest gains.
Bond prices fell. The yield on the 10-year Treasury rose to 2.48% from 2.44% late Tuesday.
Utilities, banks, Internet companies and technology stocks accounted for much of the slide. NRG Energy fell 4.4%, Capital One Financial dropped 1.5%, Netflix slid 1.6%, and Intel lost 2.5%. Health care stocks notched the biggest gains, led by McKesson Corp., which climbed 4.8%.
The U.S. and China have raised tariffs on tens of billions of dollars of each other's goods in their dispute over U.S. complaints about China's technology ambitions and practices.
Investors have been anticipating a deal throughout this year, which contributed to double-digit gains in all of the major indexes. But the latest tough talk is raising anxiety on Wall Street and casting more doubt about a resolution.
The U.S. government has filed plans to raise tariffs on $200 billion worth of Chinese imports from 10% to 25% on Friday. If the U.S. follows through on those plans, it would mark a sharp escalation in the yearlong trade dispute that has raised prices on goods for consumers and companies.
The Trump administration also has threatened to extend 25% tariffs to another $325 billion in Chinese imports, covering everything China ships to the United States.
The possibility that the trade dispute could escalate represents a marked shift from just a few weeks ago, when talks between the U.S. and China appeared to be on track for an agreement.
"There still is uncertainty out there on the three possible outcomes: We get a trade deal out of this in the short term, we get something out of it in the long term and the U.S. and China keep talking, or we get no trade deal," said Jeff Zipper, managing director at U.S. Bank Private Wealth Management.
Investors also continued to pore over the latest batch of corporate earnings reports.
Lyft slumped 10.8% in heavy trading after reporting a first-quarter loss late Tuesday that was far wider than Wall Street had forecast.
Business on 05/09/2019