Stocks slump on new trade jitters
Stocks on Wall Street closed broadly lower Thursday after investors got spooked by a report that cast doubt on the prospects of a long-term U.S.-China trade deal.
Bond prices surged, sending yields down sharply, as traders turned cautious. The sell-off was a marked shift from a day earlier, when the Standard & Poor’s 500 index notched its second alltime high this week.
Despite the sell-off, the benchmark index closed out October with its second straight monthly gain as an easing of trade tensions and surprisingly good corporate earnings gave investors more confidence.
Industrial stocks led the selling Thursday after a report from Bloomberg raised concerns about the prospects of a comprehensive trade deal between the United States and China. That overshadowed remarks by President Trump, who said Thursday that both sides are working on finding a location to sign “Phase One” of the trade deal.
“It’s mainly the concerns about whether there will be some kind of trade deal with China, both the first round and the bigger agreement that, obviously, appears further away,” said Kate Warne, chief investment strategist at Edward Jones. “When there’s good news on trade negotiations, stocks tend to move up, and when there’s bad news or concerns, stocks tend to sell off.”
The S&P 500 index fell 9.21 points, or 0.3%, to 3,037.56. It’s on track for its fourth straight weekly gain and is up 21.2% this year.
The Dow Jones industrial average fell 140.46 points, or 0.5%, to 27,046.23. The Nasdaq slipped 11.62 points, or 0.1%, to 8,292.36. The Russell 2000 index of smallercompany stocks fell 10.40 points, or 0.7%, to 1,562.45.
The flood of company earnings reports and a truce between the U.S. and China largely put investors’ worries about trade on the back burner last month. But a Bloomberg report Thursday helped put investors in a selling mood.
Caterpillar and 3M helped industrial-sector stocks sink Thursday. Caterpillar fell 1.8%, and 3M dropped 2%.
Financial stocks also took heavy losses as bond yields made a significant downward move. The yield on the 10-year Treasury fell to 1.69% from 1.79%.
Yields were already falling early in the day and fell further after a surprisingly weak survey on business activity in the Midwest. A separate report showed that U.S. consumer spending ticked up in September, though it fell short of economists’ expectations.
The technology sector also lost ground, despite Apple’s solid gains. The iPhone maker’s shares rose 2.3% after it issued an encouraging earnings report.