Fresh U.S.-China trade worries erase early gains for stocks
Wall Street closed out a volatile week with losses Friday as investors worried that upcoming trade talks aimed at resolving the costly trade war between Washington and Beijing could be in trouble.
The selling, which erased modest early gains for the market, snapped a three-week win streak for the S&P 500. The benchmark index is still up 2.2% for September.
The afternoon market slide came as investors reacted to published reports indicating Chinese officials canceled a planned trip to farms in Montana and Nebraska and would be returning to China. Representatives from the U.S. and China were engaging in preliminary discussions over the next two weeks to lay the groundwork for more formal negotiations next month.
The reports about the Chinese delegation came after President Donald Trump told reporters during a midday news conference that he wants a complete deal with China and won’t accept one that only addresses some of the differences between the two nations. Trump also said he doesn’t feel he needs to secure an agreement before next year’s election.
“This is why China has been reluctant to continue to negotiate with the Trump administration, because as soon as it looks like we’re moving toward some sort of constructive talks, there is a change in direction and it seems like a lot of head fakes,” said Ben Phillips, chief investment officer at EventShares.
Markets rallied this month after the U.S. and China took steps to ease tensions in advance of their next round of talks. That had fueled speculation among investors that the two countries may at least reach an interim deal on trade.
The S&P 500 fell 14.72 points, or 0.5%, to 2,992.07. The Dow Jones In
dustrial Average dropped 159.72 points, or 0.6%, to 26,935.07. The index had been up about 100 points then swung as low as 168 points.
The Nasdaq lost 65.20 points, or 0.8%, to 8,117.67, weighed down by declining technology sector stocks. The Russell 2000 index of smaller company stocks slid 1.71 points, or 0.1%, to
1,559.76.
Major European indexes closed mostly lower.
Even with Friday’s selling, the S&P 500 remains relatively close to its alltime high.
The benchmark index held steady this week despite volatility caused by a swing in oil prices and the Federal Reserve’s latest interest rate cut.
On Monday, oil prices spiked more than 14% after a key Saudi Arabian oil processing facility was attacked. Oil prices retreated
after the Saudi government said production could be restored by the end of the month, although they’re still up nearly 6% for the week.
The Federal Reserve cut interest rates for the second time this year as it tries to shore up economic growth amid a lingering trade war between the U.S. and China and weak economic growth overseas.
The central bank left open the possibility of additional rate cuts if the economy weakens.