Canceled summit brings stocks down

U.S. stocks partially rebounded from early declines Thursday sparked by the cancellation of the U.S.North Korea summit, as investors assessed the broader impact on trade relations and economic growth. Gold posted its biggest gain in a month and Treasuries rose with the yen amid a move to safehaven assets.

The S&P 500 Index and Dow Jones Industrial Average remained lower despite the bounce-back, while the Nasdaq Composite Index and small cap Russell 2000 Index were essentially unchanged. Transportation stocks led gainers and energy companies paced decliners, as oil weighed on the shares.

The moves followed the release of President Donald Trump’s letter to the North Korean leader Kim JongUn, in which he blamed the “tremendous anger and open hostility” in recent statements from Pyongyang for his decision. The news heightened concerns that geopolitical turmoil may upend hopes for a global expansion, particularly as a China trade deal looks less likely. On Wednesday, the administration threatened to impose tariffs on imported cars and trucks for “national security” purposes.

“The headline that Trump canceled the talk with North Korea — we are seeing a lot of these kinds of episodes,” said Zhiwei Ren, managing director and portfolio manager with Penn Mutual Asset Management. “Most of the time I just ignore it, because at the end of the day, the U.S. stock market trades with the fundamentals. This is noise. In general, we treat this as noise and hold our current position. My expectation is that I don’t think this is going to change our current bullish tone in the market because the economy is doing well and earnings are great.”