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Wall St dips as mounting US-China tensions cast doubt on trade deal

Six of the 11 major S&P 500 sectors were lower, with the financials index's 0.6% drop weighing the most after the benchmark U.S. 10-year Treasury yield hit a 2-1/2 week low.

Reuters|
Nov 20, 2019, 09.26 PM IST
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Hopes of a U.S.-China trade deal, coupled with a fairly strong third-quarter earning season, has seen Wall Street's main indexes scale record highs this month.
Wall Street edged lower on Wednesday, as hopes of a trade deal receded following an escalation in tensions between Washington and Beijing that also overshadowed upbeat forecasts from retailers Target and Lowe's.

China condemned a U.S. Senate measure aimed at protecting human rights in Hong Kong amid prolonged protests, further souring the mood after President Donald Trump warned he would raise tariffs if no deal was reached.

"China has been clear that they don't want to see any foreign interference in Hong Kong. That's the real negative to start today's market," said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

Investors looked past solid reports from Target Corp and Lowe's Cos Inc, a day after dour forecasts from Home Depot Inc and Kohl's Corp had sparked fears over the strength of the U.S. consumer.

Six of the 11 major S&P 500 sectors were lower, with the financials index's 0.6% drop weighing the most after the benchmark U.S. 10-year Treasury yield hit a 2-1/2 week low.

Recent data has pointed to a resilient U.S. economy, but recession fears are creeping back, with the gap between 2-year and 10-year Treasury yields at its narrowest in more than two weeks.

The communications services and energy sectors were the other big decliners, while the trade-sensitive Philadelphia Semiconductor index slipped 0.7%.

Hopes of a U.S.-China trade deal, coupled with a fairly strong third-quarter earning season, has seen Wall Street's main indexes scale record highs this month.

Focus now turns to the release of minutes from the Federal Reserve's October policy meeting later in the day. The central bank cut interest rates for the third time this year at the meeting, but signaled it may be done with the easing for now.

At 10:15 a.m. ET, the Dow Jones Industrial Average was down 81.33 points, or 0.29%, at 27,852.69, the S&P 500 was down 5.91 points, or 0.19%, at 3,114.27 and the Nasdaq Composite was down 9.38 points, or 0.11%, at 8,561.28.

Among other stocks, apparel retailer Urban Outfitters Inc slumped 14% after missing quarterly sales estimates on weaker demand for its namesake brand.

Declining issues outnumbered advancers for a 1.18-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.07-to-1 ratio on the Nasdaq.

The S&P index recorded 18 new 52-week highs and two new lows, while the Nasdaq recorded 49 new highs and 50 new lows.
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