Stocks down on doubts over U.S., Korea summit

U.S. stocks erased early gains and turned lower Tuesday as optimism over improving trade relations with China gave way to renewed concerns about geopolitical tensions with North Korea. The dollar fell, Treasuries were steady and crude slid to a loss after surging to the highest since November 2014.

The S&P 500 Index tumbled with the Dow Jones Industrial Average and Nasdaq benchmarks in late trading after President Donald Trump cast doubt on a possible summit with North Korea during his Oval Office meeting with South Korea President Moon Jae-in.

“What we saw when the meeting was originally scheduled was that the market reacted favorably to that, so I think that any cancellation could cause a little bit of a pullback,” said Adam Phillips, director of portfolio strategy at EP Wealth Advisors. “I would expect that that would be short lived, because at the end of the day we’re back where we started and it means uncertainty is back on the table, but I think the factors underpinning the economy are still quite strong.”

Earlier, stocks rallied following China’s announcement that it will cut the import duty on passenger cars to 15 percent, signaling a further easing of trade tensions with the U.S. The Stoxx Europe 600 Index climbed, and emergingmarket shares advanced, ending a three-day losing streak.

“At the end of the day, the more trade the better,” said Lee Caleshu, chief investment officer of Halite Parters. “The more openness, the less tariffs, the less government regulations coming in to affect industry, the better.”

The euro fell slightly as investors weighed the chances that Italy’s president will seek to curtail a potential populist government, while the country’s bonds rebounded from a two-day slide. The Turkish lira sank to yet another record low. Sterling strengthened amid speculation there could be another U.K. election and after upbeat comments from a Bank of England policy maker.

Beyond politics, central banks are also in focus this week. The Federal Reserve will release minutes of its latest policy meeting on Wednesday, while the ECB follows suit on Thursday. A raft of U.S. debt sales adds to the busy agenda.