Stocks fizzle after early gains, suffer first setback in six days

NEW YORK U. S. stocks fell Tuesday for the first time in six days after the recent upward momentum gave way to lingering concerns about the U. S. trade war with China.

Defense contractors suffered steep declines and technology stocks gave up most of their early gains, taking the steam out of a morning rally on Wall Street. The Dow Jones industrial average closed with a loss of 14 points after rising 186 points just after trading began.

The market had rallied for five consecutive days since the Federal Reserve signaled it is open to cutting interest rates if needed to stabilize the economy rattled by trade disputes. The gains had erased much of the S& P 500’ s 6.6 percent decline in May. But on Tuesday, concerns that the U. S. trade spat with China could be prolonged and hurt growth in the world’s two biggest economies dimmed investors’ enthusiasm.

Katie Nixon, the chief investment officer at Northern Trust Wealth Management, said there is no clear resolution in sight to the trade war and investors will have to get accustomed to uncertainty hanging over the market.

“The market’s going to be really sensitive to trade news,” she said. “This is going to be very hard to resolve neatly and quickly.”

President Donald Trump has said he plans to meet with China’s president, Xi Jinping, at the Group of Twenty summit late this month in Osaka, Japan. But Trump reiterated Tuesday that if they can’t reach an agreement on trade, he will proceed with tariffs on $ 300 billion in goods from China that aren’t already subject to import taxes.

Defense companies were the biggest decliners in the S& P 500. The market on Monday welcomed news of a mega- merger between Raytheon and United Technologies, but the stocks dropped sharply Tuesday. Raytheon lost 5.1 percent and United Technologies shed 4 percent. L3 Technologies fell 4.4 percent and Harris Corp. dropped 4.3 percent. Trump expressed some reservations Monday about the Raytheon- United Technologies tie- up.

Technology stocks also gave up some early gains. Adobe fell 1.6 percent and Advanced Micro Devices fell 2.5 percent. The tech sector is still up nearly 24 percent so far this year, the best performer among the 11 sectors in the S& P 500.

Consumer- focused stocks and internet companies were among the gainers. Facebook rose 1.9 percent and Verizon gained 1.2 percent. Walgreens rose 1.1 percent and Dollar Tree rose 2.7 percent.

The S& P 500 slipped 1.01 points, or 0.03 percent, to 2,885.72. The Dow fell 14.17 points, or 0.1 percent, to 26,048.51. The Nasdaq composite slipped 0.60 of a point to end at 7,822.57. The Russell 2000 index of small companies fell 4.45 points, or 0.3 percent, to 1,519.11.

John Lynch, the chief investment strategist at LPL Research, said in a note to clients that a U. S. trade deal with China “is unlikely until more economic pain is incurred by both China and the United States.”

That pain will eventually push the two nations to strike a deal, Lynch said.