U.S. Stocks Close Lower as Trade Progress Slows
November 20 2019 - 4:10PM
Dow Jones News
By Caitlin Ostroff and Gunjan Banerji
Global stocks slumped Wednesday as trade talks between the U.S.
and China appeared to near an impasse, with President Trump
threatening to raise tariffs further.
The Dow Jones Industrial Average dropped 112.93 points, or 0.4%
to 27821.09, its biggest fall of the month. The S&P 500 shed
0.4%. The Nasdaq Composite lost 0.5%, retreating from the record
hit Tuesday.
Losses deepened and major U.S. indexes fell near session lows
after Reuters reported that the first phase of a trade deal between
the U.S. and China may not materialize by year-end. Trade has been
a key driver of market swings this year and the recent dash for
stock records had been driven, in part, by optimism on a final
deal.
Stocks in Europe and Asia also logged declines as investors grew
concerned that relations between the world's two biggest economies
may be further strained after the U.S. Senate passed a bill in
support of Hong Kong's antigovernment protesters.
The bill would require the U.S. Secretary of State to certify
annually that Hong Kong remained sufficiently independent from
Beijing to warrant the special status that has helped the city grow
into a global financial hub. China's Foreign Ministry said the act
was a violation of international law, while Hong Kong officials
said foreign legislatures shouldn't interfere with its internal
affairs.
"The Chinese aren't very happy about that bill progressing,"
said Paul Flood, multiasset portfolio manager at Newton Investment
Management. "It does make the tariffs discussion more
difficult."
Wednesday's fall punctuates a relatively calm stretch for major
U.S. indexes, during which they have ascended to record after
record.
A breakdown in the trade talks would derail the White House's
plans for a limited "phase one" agreement this year. Investors are
also growing jittery that fresh tariffs on Chinese products
including smartphones and toys may be put into effect Dec. 15,
directly hitting American consumers. Mr. Trump said in a Tuesday
cabinet meeting that China needs to make a deal he likes to avoid
levies going even higher.
In an interview on CNBC Wednesday, Federal Reserve governor Lael
Brainard highlighted that trade uncertainty has been pressuring the
economy. Shares of materials companies and technology heavyweights
with big exposure to the global economy were some of the biggest
decliners in Wednesday's trading session.
Still, she said she sees the economy continuing to grow next
year.
The strength of the U.S. consumer was on display Wednesday as
corporate earnings drove swings among shares of individual
companies. Shares of Target climbed $15.58, or 14%, to $126.43 -- a
fresh record and the S&P 500's biggest winner -- after the
retail chain posted another quarter of rising sales as the company
continued to draw more shoppers online and in its stores.
Lowe's shares jumped $4.43, or 3.9%, to $117.83 after the
home-improvement retailer raised its profit forecast and disclosed
plans to shut some Canadian stores.
Yana Barton, an equity portfolio manager at Eaton Vance, said
she's optimistic about the stock market's near-term trajectory
after major indexes have hit a string of recent records. But, she
said "a lot of that really hinges on trade and moving from a
strategy of hope, to one that has actual meat around some kind of
resolution."
Urban Outfitters dropped $4.38, or 15%, to $24.41 after the
retailer's third-quarter profit declined.
Meanwhile, the pan-continental Stoxx Europe 600 index fell 0.4%,
led by declines in almost every sector.
Investors reached for haven assets, sending the yield on 10-year
Treasurys to 1.737% from 1.785% Tuesday.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Gunjan
Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
November 20, 2019 16:55 ET (21:55 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.