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Dow Plunges 280 as Trump Downplays Chances of China Trade Deal

Dow Plunges 280 as Trump Downplays Chances of China Trade Deal

Tuesday, 03 December 2019 04:08 PM

U.S. stocks sold off for a third consecutive session on Tuesday after comments from President Donald Trump and Commerce Secretary Wilbur Ross threw cold water on hopes of a possible near-term respite from the market-bruising U.S.-China trade war.

The blue-chip Dow had its worst day since Oct. 8, and all three major stock indexes backed further away from last week’s record highs that were fueled by optimism that an interim deal between the United States and China was in the works.

That optimism was dampened as Trump suggested a deal might have to wait until after the 2020 election, and separately, Ross confirmed that new tariffs on Chinese imports would take effect on Dec. 15 as scheduled, unless substantial progress was made.

Those remarks, on the heels of France’s threatened retaliation over potential new U.S. duties on French products, itself a retaliation against a proposed French “digital tax,” suggested that America’s hydra-headed tariff war against its major trading partners would continue to dominate markets for the foreseeable future.

Speaking to reporters in London, Trump raised the possibility of the trade deal being delayed until after the U.S. presidential elections in November 2020.

“I have no deadline, no. In some ways I think it’s better to wait until after the election with China,” Trump said ahead of a meeting of NATO leaders.

Trump downplayed the stock market’s Tuesday losses as “peanuts” when compared to both the economic importance of striking a favorable trade deal with China and the market’s gains since his election, CNBC reported.

The Dow Jones Industrial Average “was about 16,000 or 15,000 and now it’s almost at 30,000,” Trump said an international NATO summit in London. “It’s going to be at 30,000,” he said.

“If the stock market goes up or down: I don’t watch the stock market. I watch jobs. Jobs are what I watch,” he added. Today’s move is “peanuts compared to — We have picked up record numbers so that’s OK. That’s the way I feel.”

“It can’t be an even deal: If it’s an even deal it’s no good,” the president said.

Ross also told CNBC that he expects staff-level talks with China to continue but there are no high-level meetings scheduled.

“The setback in the Chinese trade negotiations, coupled with tariffs on the French with regard to the digital tax and tariffs on Brazil and Argentina for steel, when you add that up it was disappointing to the markets,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

“The long-term impact of these negotiations could very well be positive, but the short-term implication portends a slowing of the economy and that’s not viewed well by the markets,” Massocca added.

Tariff-sensitive chipmakers fell, with the Philadelphia SE Semiconductor index dropping 1.5%, its worst day since Oct. 23.

The Dow Jones Industrial Average fell 280.23 points, or 1.01%, to 27,502.81, the S&P 500 lost 20.67 points, or 0.66%, to 3,093.2 and the Nasdaq Composite dropped 47.34 points, or 0.55%, to 8,520.64.

Nine of the 11 major sectors in the S&P 500 were in negative territory, with Apple (AAPL.O) and Intel (INTC.O) weighing the most.

Energy, financial and trade-vulnerable industrial stocks suffered the largest percentage losses.

Shares of AK Steel Holding (AKS.N) rose 4.2% after miner Cleveland Cliffs (CLF.N) agreed to buy the company in an all-stock deal worth about $1.1 billion.

Audentes Therapeutics Inc.’s (BOLD.O) shares soared 106.0% after Japan’s Astellas Pharma Inc. said it would buy the U.S. drugmaker for about $3 billion in cash.

Declining issues outnumbered advancing ones on the NYSE by a 1.63-to-1 ratio; on Nasdaq, a 1.65-to-1 ratio favored decliners.

The S&P 500 posted 2 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 40 new highs and 76 new lows.

Volume on U.S. exchanges was 7.41 billion shares, compared with the 6.83 billion average over the last 20 trading days.

© 2020 Thomson/Reuters. All rights reserved.

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U.S. stocks fell after comments from President Donald Trump sparked fears of a delay in resolving a bruising tariff dispute with China until after the presidential election in November 2020.
stocks, dow, s&p 500, wall street
Tuesday, 03 December 2019 04:08 PM
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