Stocks on Wall Street turned down midway during the session as support faded for technology and internet shares on continuing concern about the outcome of a global trade war.
President Donald Trump suggested he would scrap plans for new restrictions on Chinese investment in US technology companies and instead rely on existing legislation to vet deals.
China’s Ministry of Commerce said it was closely watching the situation. The administration is due to get recommendations from the Treasury on June 20, while the planned tariffs take effect on Jul;y 6.
Meanwhile, China’s sharemarket and currency continue to sink on the trade war fears and its impact on its huge trade surplus with the US.
“The trade conflict between the US and China has turned out to be more protracted and more fierce than we had expected,” says Victoria Mio, Hong Kong-based chief investment officer for China at Robeco, a Dutch asset-management firm.
“The weakening of the economy has also surpassed market expectations, and the Chinese central bank probably needs to do more to alter such expectations.”
The Dow Jones Industrial Average closed 165.52 points lower, or 0.7%, at 24,117.59 after earlier rising as much as 286 points.
The S&P 500 shed 0.9% to 2669.63 and the tech-heavy Nasdaq Composite lost 1.5% to 7445.08.
Risk profiles decline
“There’s still some anxiety in the marketplace that maybe the president or somebody in the government is still going to give some scrutiny over China,” WallachBeth Capital. director of ETF trading solutions Mohit Bajaj says.
“I just think people are going to continue to shave off risk as we go into the [July 4] holiday.”
The US dollar and government bonds climbed as stocks slumped.
The WSJ Dollar Index added 0.4% and the yield on the benchmark 10-year treasury note fell to 2.833% from 2.882% on Tuesday. The decline in bond yields pressured financial stocks in the S&P 500, which slipped 0.4%.
Energy stocks provided the bright spot in the market, rising 1.6%, as US crude added 3.2% to $US72.78 a barrel. Brent crude, the global benchmark, rose 2% to $US77.82.
Oil prices are at a three-year high after jumping sharply this week on fears supply could decline faster than expected. The US government expects countries to cut all imports from Iran by November 4, while US crude inventories dropped unexpectedly.
ClearBridge Investments investment strategist Jeff Schulze says the market is underpinned by strong global demand coupled with restrained supply despite an Opec-led move last week to boost output.
“There are a lot of positive reasons for energy to continue performing, and this is the beginning of a much bigger move higher,” he says.
Conagra drops on deal
In corporate news, shares of Conagra Brands were among biggest decliners, off 7.1%, after the company said it would buy Pinnacle Foods for $US8.2 billion in cash and stock. Pinnacle dropped 4.2%.
The Justice Department approved Disney ’s proposed $US71 billion acquisition of 21st Century Fox assets, sending shares of Disney up 0.7%.
Shares of Comcast lost 0.3% after the Wall Street Journal reported that the company was exploring ways to gain additional capital in its competition with Disney to acquire 21st Century Fox ’s entertainment assets.
Elsewhere, the Stoxx Europe 600 added 0.7% after recovering from earlier losses.
France’s CAC 40 Germany’s DAX both rose 0.9% while the UK’s FTSE 100 surged 1.1%,
Weakness in Asian stocks continued, with Hong Kong’s Hang Seng falling 1.8% and the Shanghai Composite dropping 1.1% after entering a bear market on Tuesday.
Trump on a roll
In non-financial news, US President Trump is on a roll with news he will meet Russian President Vladimir Putin at a summit likely to be held in Helsinki or Vienna within the next month.
Mr Trump also has the right to appoint another justice to the Supreme Court, tipping the majority to conservatives, after the retirement of centrist Anthony Kennedy.
Earlier, the court upheld the right of the president to impose travel bans on countries without regard to factors such as religious discrimination.
The ban applies to five Muslim-dominant countries as well as North Korea and Venezuela.
In another decision this week, the court struck a blow against the labour movement by barring public employee contracts requiring workers to pay union dues.
All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- ASB's Nick Tuffley on the latest Consumers Price Index data
- Straker Translations CEO Grant Straker on his plan for growth
- Fuji Xerox managing director Peter Thomas discusses the business
- Financial adviser John Cliffe says default KiwiSaver schemes urgently need change
- NBR Radio: The best interviews – updated daily