Stocks skid as ten­sions flare be­fore trade talks

The News Herald (Willoughby, OH) - - FRONT PAGE - By Damian J. Troise and Alex Veiga AP Busi­ness Writ­ers

Stocks closed lower on Wall Street as ten­sions be­tween U.S. and China flared be­fore planned trade talks.

Stocks closed broadly lower on Wall Street Tues­day as ten­sions be­tween the U.S. and China flared ahead of ne­go­ti­a­tions aimed at re­solv­ing the costly trade war be­tween the world’s two big­gest economies.

The sell-off, which ac­cel­er­ated in the last hour of reg­u­lar trad­ing, knocked more than 300 points off the Dow Jones In­dus­trial Av­er­age. Tech­nol­ogy com­pa­nies, banks and health care stocks bore the brunt of the sell­ing, which stretched the mar­ket’s losses fur­ther into a fourth week.

The mar­ket slide be­gan after the U.S. black­listed a group of Chi­nese com­pa­nies, claim­ing that their tech­nol­ogy plays a role in the re­pres­sion of China’s Mus­lim mi­nor­ity groups. The State De­part­ment also im­posed re­stric­tions on visas for Chi­nese of­fi­cials.

The moves cast more doubt on whether Wash­ing­ton and Beijing will find a res­o­lu­tion to their lon­grun­ning and eco­nom­i­cally dam­ag­ing trade con­flict. En­voys from the U.S. and China are sched­uled to meet in Wash­ing­ton on Thurs­day for an­other round of trade talks.

“The rhetoric on both sides, whether it’s the U.S. putting cer­tain Chi­nese tech­nol­ogy com­pa­nies on a black­list, or China vow­ing to re­tal­i­ate with a ‘stay tuned’, it just keeps up­ping the tem­per­a­ture in the room and cre­at­ing greater un­cer­tainty for busi­nesses, for con­sumers and for in­vestors,” said Sameer Sa­mana, se­nior global mar­ket strate­gist at Wells Fargo In­vest­ment In­sti­tute.

The S&P 500 index lost 45.73 points, or 1.6%, to 2,893.06. The Dow slid 313.98 points, or 1.2%, to 26,164.04. The Nas­daq, which is heav­ily weighted with tech­nol­ogy com­pa­nies, dropped 132.52 points, or 1.7%, to 7,823.78.

Smaller com­pany stocks were also big de­clin­ers, send­ing the Rus­sell 2000 index down 25.19 points, or 1.7%, to 1,472.60.

The yield on the 10-year Trea­sury fell to 1.53% from 1.55% late Mon­day, a sig­nal that in­vestors fa­vored lower-risk in­vest­ments amid the trade war tur­moil. Util­i­ties and real es­tate com­pa­nies, both safe-play sec­tors, held up bet­ter than the rest of the mar­ket, though they also ended the day in the red.

The lat­est es­ca­la­tion in U.S.China ten­sions adds yet an­other worry for in­vestors al­ready anx­ious over a bevy of po­lit­i­cal and eco­nomic con­cerns. Last week, the S&P 500 posted its first backto-back losses of 1% this year as sur­pris­ingly weak num­bers in sur­veys of man­u­fac­tur­ing and ser­vice in­dus­tries showed the U.S.-China trade war is threat­en­ing U.S. eco­nomic growth.

The Trump ad­min­is­tra­tion’s moves to black­list select Chi­nese com­pa­nies and re­strict visas on cer­tain of­fi­cials damp­ened in­vestors’ hopes that the ne­go­ti­a­tions this week will yield progress.

“The jock­ey­ing for po­si­tion in front of the Thurs­day and Fri­day meet­ings in Wash­ing­ton has in­ten­si­fied per­haps more than the mar­ket could have imag­ined,” said Julian Emanuel, chief eq­uity and de­riv­a­tives strate­gist at BTIG.

Tech­nol­ogy stocks were among the big­gest losers as chip­mak­ers ab­sorbed the im­pact of the lat­est U.S. re­stric­tions on sales to Chi­nese tech com­pa­nies that de­velop fa­cial recog­ni­tion and other ar­ti­fi­cial in­tel­li­gence tech­nol­ogy. Am­barella tum­bled 9.5% and Nvidia fell 3.9%.

The sec­tor has shoul­dered much of the volatil­ity from swings in trade war sen­ti­ment be­cause many of the com­pa­nies face big­ger risks to sales and sup­ply chains.

Sev­eral med­i­cal de­vice mak­ers knocked down health care stocks. Thermo Fisher fell 6% and Bos­ton Sci­en­tific slid 6.1%. Banks also dropped as bond yields fell. Bank of Amer­ica lost 2.4%.

Bench­mark crude oil fell 12 cents to set­tle at $52.63 a bar­rel. Brent crude oil, the in­ter­na­tional stan­dard, slid 11 cents to close at $58.24 a bar­rel.

While the price of U.S. crude is up just un­der 9% so far this year, it re­mains off by more than 27% from a year ago. That slide in prices over the past 12 months has weighed on en­ergy stocks this year.

En­ergy is the big­gest loser among the S&P 500’s 11 sec­tors. It’s down 2.8% for the year and 27.8% over the past 12 months. It’s also the worst-per­form­ing sec­tor so far this month.

The stocks could face more pres­sure when en­ergy com­pa­nies re­port their third-quar­ter re­sults later this month.

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