Jitters over trade talks are drag on stocks

NEW YORK — U.S. stocks mostly fell Monday, as uncertainty continued to hang over U.S.-China trade negotiations — or at least over investors’ perception of them.

The stock market has been rallying for five weeks in part on optimism that the United States and China are nearing a stopgap deal to calm their dispute.

But President Donald Trump said over the weekend that reports about U.S. willingness to lift tariffs were “incorrect,” only two days after a Chinese official said both sides agreed to rollbacks if talks progress.

Stocks dropped as soon as trading began Monday, and the S&P 500 lost as much as 0.6 percent from its record level.

But indexes pared their losses as the day progressed, and by the end of trading, the S&P 500 was down 6.07 points, or 0.2 percent, at 3,087.01.

The Nasdaq composite slipped 11.04, or 0.1 percent, to 8,464.28.

The Dow Jones Industrial Average was an outlier and eked out another record, in large part because of a big gain for Boeing. It added 10.25 points, or less than 0.1 percent, to 27,691.49.

A still-strong job market, interest-rate cuts by the Federal Reserve and betterthan-expected corporate earnings in the summer all have contributed to a nearly 9 percent leap for the S&P 500 since late August.

The market’s focus, though, lately has seemed to revolve only around the state of U.S.-China trade negotiations.

Stocks in the financial and energy industries have been generally rising since Trump said last month that the U.S. and China were negotiating “Phase 1” of a trade deal.

But these so-called “cyclical” stocks, whose profits are closely tied to the economic cycle, were among Monday’s losers.

Such sudden snaps in movement are frustrating for investors who prefer looking at the longer term.

“The market is myopically focused on the next minute,” said Michael Liss, senior portfolio manager at American Century Investments.

“If I own Chevron or Total, which I do, and we don’t get a ‘Phase 1’ signing before the end of the year, I’m not going to sell those stocks,” he said. “I just don’t think that over a three- or five-year time frame, oil demand is going to be dented because of that” even if it “flies in the face of everyone selling cyclicals because we don’t have a trade deal.”

The next hints on progress in negotiations with China may come Tuesday, when Trump is scheduled to deliver a speech on trade and economic policy at the Economic Club of New York.