Cancellation of Korea summit sends stocks on bumpy ride
NEWYORK» U.S. stocks finishedmostly lower Thursday as energy companies skidded along with oil prices. The market dropped after President Donald Trump said he canceled a meetingwithNorth Korean leaderKimJong Un, but recoveredmost of those losses.
Crude oil futures and energy companies fell as investors reacted to reports that OPEC nationsmay start producingmore oil. Banks fell as interest rates edged lower, and car companies including Fiat Chrysler and Toyota dropped as the Trump administration considered tariffs on imported cars and car parts, a move that was criticized by the governments of China, Japan and the European Union.
The Dow Jones industrial average fell as much as 280 points in the morning, more than 1 percent, after Trump said the June meetingwithKim was off. In a letter, Trump said hewas canceling the summit because of “tremendous anger and open hostility” in a recent statement by a NorthKorean official. Technology companies, which have led the market in recent years, took some of the biggest losses and defense contractors climbed.
The market gradually recovered those losses, and Trump later told reporters that the meeting could still happen in June or later on. Stocks finished only slightly lower thanwhere they were before Trump’s initial announcement.
Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance, said investors were troubled at first by Trump and Kim’s statements about a possible nuclearwar, but they’ve gotten used to it, which means the market doesn’t react as much to their statements.
“The first time the market hears these threats there’s a large reaction and after that there’s less reaction,” he said. “It’s just rhetoric right now and there’s no actual military conflict, (so) these moves are kind of shortlived.”
The S&P 500 index dropped 5.53 points, or 0.2percent, to2,727.76. TheDowJones industrial average lost 75.05 points, or 0.3 percent, to 24,811.76. The Nasdaq composite dipped 1.53 points, less than 0.1 percent, to 7,424.43. The Russell 2000 index of smaller-company stocks edged up 0.61 points to 1,628.22.
Benchmark U.S. crude lost 1.6 percent to $70.71 per barrel in New York. Brent crude, used to price international oils, fell 1.3 percent to $78.79 a barrel in London.
Various news outlets reported that the nations of the OPEC cartel might start producing more oil in response to reduced exports from Venezuela and Iran. Greater supplies would send prices lower. Energy companies have slipped in recent days as investors anticipated that possibility. OnThursdayExxon Mobil lost 2.3percent to$80.27andChevron dipped 1.6 percent to $126.61.
OPEC and a group of other major oil producers cut production last year in response to a steep drop in oil prices. U.S. crude had fallen frommore than $100 a barrel inmid2014 to as little as $26 a barrel in early 2016. On Monday U.S. crude peaked at $72.24 a barrel, its highest price since late 2014.
The two sides agreed in March after Trump and Kim traded public insults and threats for months.
Still, defense companies fared better than the rest of the market. Raytheon rose 1.3 percent to $213.94 and Northrop Grumman gained 1.4 percent to $332.81.
Bond prices rose. The yield on the 10year Treasury note fell to 2.97 percent from 2.99 percent, and banks traded lower. Metals prices also increased as the dollar weakened. Gold gained 1.1 percent to $1,304.40 an ounce and silver jumped 1.7 percent to $16.69 an ounce. Copper picked up 0.8 percent to $3.10 a pound.
The Trump administration plans to conduct an investigation into imported vehicles and automotive parts on national security grounds. A European Union official said the proposal would violateWorld Trade Organization rules and Japan and China also criticized the proposal. Those same grounds are the justification for proposed tariffs on imported aluminumand steel, and theU.S. will decide by June 1whether to impose tariffs on steel and aluminum fromEurope.
FiatChrysler lost 0.9 percent to $22.26 and TataMotors fell 5.8 percent to $21.09. Toyota shares fell 1.8 percent to $132.44. U.S. rivals Ford rose 1.6 percent to $11.62 and General Motors added 1.4 percent to $38.39.
“I’m hoping thatwhat they’re doing is trying toput a little pressure on theNAFTAnegotiations and this will be a way to getMexico and Canada to agree,” said Zaccarelli, of the Independent Advisor Alliance.
In other energy trading, wholesale gasoline fell 1.2 percent to $2.23 a gallon and heating oil lost 1 percent to $2.27 a gallon. Natural gas rose 0.9 percent to $2.94 per 1,000 cubic feet.
The dollar fell to 109.28 yen from 110.07 yen. The euro rose to $1.1727 from$1.1698.