Health care firms lead stocks’ slide

Health care companies led stocks lower Monday as investors waited for more details on reports that the U.S. and China are moving closer to a deal to resolve their costly trade dispute.

The sell-off was most pronounced in sectors that have shown strong gains over the past two months, including health care and technology. Financial stocks also took heavy losses.

The S&P 500 index dropped 10.88 points, or 0.4 percent, to 2,792.81. The index, a benchmark for many mutual funds, is still up 11.4 percent this year.

The Dow Jones industrial average fell 206.67 points, or 0.8 percent, to 25,819.65. The index was briefly down more than 414 points.

The Nasdaq composite lost 17.79 points, or 0.2 percent, to 7,577.57. The Russell 2000 index of smaller companies gave up 14.20 points, or 0.9 percent, to 1,575.44.

Major indexes in Europe finished mostly higher.

The world’s two largest economies have pulled back from an escalation of their damaging trade war since they started negotiating last month. President Donald Trump postponed a deadline for raising tariffs on more Chinese goods, citing progress in a series of talks. Now, media reports say the nations could strike a deal this month.

“The devil is still in the details, and those details are still pretty sparse at this point,” said David Lefkowitz, senior Americas equity strategist at UBS Global Wealth Management. “When tariffs might be removed is definitely a key question, and also there’s still some uncertainty about whether or not a deal will be consummated.”

Investors have been hoping for a resolution in the long-running trade dispute, which centers on China’s technological ambitions. Washington claims Beijing is stealing technology as well as forcing companies to turn over technology in order to do business.

Retaliatory tariffs imposed by both nations have raised prices on a variety of goods. Now, both sides could be close to a deal that would call for China to cut tariffs on U.S. farm, auto and other products, while the U.S. removes most sanctions on imports, according to media reports.

Optimism that a trade pact soon could be finalized gave markets an early boost Monday, but the rally faded as traders sized up mixed U.S. construction-spending data.

The Commerce Department said construction spending edged down 0.6 percent in December amid declines in residential construction and government projects. Construction spending in 2018 reached record levels, but it was the smallest increase in seven years.

“It gave people an excuse to sell,” said JJ Kinahan, chief market strategist for TD Ameritrade.

The construction-spending report was good news for homebuilders, which bucked the broader market trend. PulteGroup climbed 3.5 percent, while D.R. Horton rose 3.1 percent.

Health care stocks led the sell-off among companies in the S&P 500. UnitedHealth Group slid 4.1 percent, the biggest loss among the 30 stocks in the Dow.

Technology companies and banks also fell. Salesforce.com sank 3.7 percent, and Charles Schwab lost 2.5 percent.

AT&T dropped 2.7 percent on news that the telecommunications company is reorganizing its WarnerMedia unit, which includes HBO and Warner Bros.

Children’s clothing retailer Children’s Place gave investors a dismal forecast after reporting a disappointing fourth quarter. The stock skidded 10.3 percent.

The main issue is competition from dying competitors holding liquidation sales. Gymboree and Crazy 8 stores have been in the process of shutting down, which means liquidation sales and better deals for shoppers.