U.S. stocks fell at start of trade Tuesday amid uncertainty over U.S-China trade negotiations, after a report that the White House will delay the implementation of import tariffs on Chinese goods, set to go in effect Dec. 15, as it continues negotiations toward a phase-one trade deal.
Investors were also preparing for a Federal Reserve policy meeting set to get under way Tuesday morning.
How are major benchmarks performing?
The Dow Jones Industrial Average
DJIA, -0.11%
fell 93 points, or 0.3%, at 27,820, those for the S&P 500 index
SPX, -0.08%
fell 8 points, or 0.3%, at 3,128, while the Nasdaq Composite index
COMP, +0.04%
fell 18 points, or 0.2%, at 8,604.
On Monday, the Dow retreated 105.46 points, or 0.4%, at 27,909.60, while the S&P 500 index lost 9.95 points, or 0.3%, at 3,135.96 and the Nasdaq Composite Index shed 34.70 points, or 0.4%, at 8,621.83.
All three benchmarks on Monday snapped a three-day win streak.
What’s driving the market?
U.S. and Chinese trade negotiators are “laying the groundwork for a delay” implementing import tariffs of 15% that had been planned to be levied on $165 billion in annual imports of consumer goods from China, the Wall Street Journal reported Tuesday morning.
The news triggered a rally in stock-index futures premarket trade, which had been trading lower on China trade concerns after a separate report that U.S. lawmakers are working on a new bill that would bar the use of federal funds to buy Chinese buses and railcars, a move that would likely complicate efforts to strike a partial trade agreement between Washington and Beijing ahead of a Dec. 15 deadline, when new tariffs are set to take effect. The rally was short-lived, however as stocks headed lower at the start of official trade.
Sources close to the talks told the South China Morning Post that “it is growing increasingly unlikely that a US-China trade deal will be completed this week,” though the same officials said that they expect the Dec. 15 tariffs to at least be delayed to give more time to work out a deal.
Meanwhile, the Federal Reserve is set to commence its two-day policy meeting where it is expected to hold steady on interest rates following a stellar November jobs report, but investors will be eager to glean details on the outlook for monetary policy. The WSJ reported that Fed Chairman Jerome Powell’s main assignment will be to forge consensus toward a “broader revamp of the Fed’s rate-setting strategy” as he encourages the central bank to let inflation run above its annual 2% target.
On the U.S. economic data front, a report on small-business owners’ confidence in the U.S. economy rose in November, its largest month-over-month gain since May 2018, as owners continued to invest, hire and increase wages, according to the National Federation of Independent Business.
A final estimate of productivity and labor costs in the third quarter showed productivity falling 0.2% versus the initial estimate of a 0.3% decline. Economists polled by MarketWatch expected the number to be revised to a 0.1% contraction. Unit-labor costs, meanwhile, rose 2.5% in the quarter, more slowly than the initial 3.6% estimate and lower than the 3.0% growth expected by economists.
Which stocks are in focus?
Shares of Netflix Inc.
NFLX, -2.08%
fell 2.6% early Tuesday, after Needham analyst Laura Martin downgraded the stock to underperform from hold, as she predicted the online streaming service will lose 4 million subscribers next year amid tough competition from rivals.
NortonLifeLock Inc.
NLOK, +3.80%
has attracted interest in a possible buyout from several suitors, including rival McAfee LLC, according to a Monday-evening report in the Wall Street Journal. Shares rose 3%.
Stitch Fix Inc.’s
SFIX, +10.63%
stock rallied 12.9% after the online personal-styling service reported first-quarter results that exceeded analysts’ estimates.
AutoZone Inc. shares
AZO, +8.55%
rose 5.9% Tuesday, after the car parts retailer beat estimates for its fiscal first quarter.
Designer Brands Inc.
DBI, -15.88%
stock tumbled 13.8% after the accessories retailer reported third-quarter profit that missed expectations and cut its guidance.
Chewy Inc.
CHWY, +0.87%
shares fell 2.9% even after the online pet supply retailer late-Monday posted better-than-expected results for the quarter.
How are other markets faring?
The yield on the 10-year U.S. Treasury note
TMUBMUSD10Y, +1.29%
fell less than a basis point to 1.820% early Tuesday amid trade developments.
West Texas Intermediate crude for January delivery
CLF22, +1.20%
on the New York Mercantile Exchange fell 14 cents, or 0.2%, to $58.88 a barrel, as trade-war concerns persisted.
February gold
GCG20, +0.36%
on Comex added $8.10, or 0.3%, to reach $1,472.90, ahead of the Federal Reserve’s central bank meeting and after lackluster trade on Monday, where the metal finished little changed.
The U.S. dollar, as measured by the ICE U.S. Dollar Index
DXY, -0.09%,
declined 0.1% at 97.543 against a basket of a half-dozen currency peers.
In Europe, the Stoxx 600 Europe index
SXXP, -0.49%
traded 0.4% lower at 404.83.
In Asia overnight Friday, the Hang Seng
HSI, -0.22%
closed off 0.2%, the China CSI 300
000300, +0.13%
inched up 0.1%, while the Shanghai Composite Index
SHCOMP, +0.10%
gained about 0.1%, following a similar gain on Monday. Japan’s Nikkei 225
NIK, -0.09%
retreated 0.1%.
Source : MTV
