Stocks do an about-face; S&P 500 slumps to its lowest since May
Global stock markets swung wildly again Wednesday as investors chased after mixed signals on global trade tensions, and the Standard & Poor’s 500 index erased an early-morning jump to drop to its lowest closing level in nearly a month.
One of the day’s few market certainties was oil’s continued rise, and benchmark U.S. crude hit its highest price since 2014. That helped lift energy stocks, but other areas of the market zigged, zagged and zigged again as the day progressed.
Early on, Asian stocks slumped on concerns about the sometimes-heated talk on trade that has been raging between the United States and its partners. European stocks later flipped from losses to gains on hopes that a move by the Trump administration indicated a less-combative stance with China. U.S. stocks opened higher, but the gains evaporated after a White House advisor said the move wasn’t necessarily a signal of a softer stance.
By the end of the day, the S&P 500 had dropped 23.43 points, or 0.9%, to 2,699.63. Earlier in the day it was up as much as 0.8%.
The Dow Jones industrial average fell 165.52 points, or 0.7%, to 24,117.59. The Nasdaq composite sank 116.54 points, or 1.5%, to 7,445.08. The Russell 2000 index of small-cap stocks slid 28.07, or 1.7%, to 1,640.45.
Stocks have swung in recent weeks, even by the hour, on worries about global trade.
Investors were feeling less nervous about it in the morning after the Trump administration indicated it was shifting away from a plan to impose limits on Chinese investment in U.S. technology companies and on high-tech exports to China. Instead, the administration is calling on Congress to enhance an existing review process.
Markets took it as a sign of a less antagonistic stance, but the gains disappeared in the afternoon after Larry Kudlow, director of the National Economic Council, said in an interview with Fox Business that the stance should not necessarily be viewed as softer.
“Trade is the hot topic du jour, and it’s having an impact on the market,” said Barry Bannister, head of institutional equity strategy at Stifel.
It’s only adding to pressures that have been mounting on the market. The Federal Reserve is raising interest rates, but more importantly to Bannister, interest rates — after accounting for the effects of inflation — are set to cross key thresholds. That is putting pressure on stock prices, and he said this bull market that began in 2009 may end by the first quarter of 2020.
Chinese stocks have already fallen into a bear market. The Shanghai composite index sank 1.1% on Wednesday, and it’s down more than 20% from a late-January high. Other Asian markets also fell Wednesday. Japan’s Nikkei 225 lost 0.3%, and South Korea’s Kospi fell 0.4%.
European stocks rose. France’s CAC 40 gained 0.9%, Germany’s DAX rose 0.9% and the FTSE 100 in London gained 1.1%.
In the U.S. market, Conagra Brands dropped 7.3% to $35.45 — the biggest loss among stocks in the S&P 500 — after it agreed to buy Pinnacle Foods, the company behind Duncan Hines and Hungry-Man, in a deal that would create a frozen-food giant.
World Wrestling Entertainment climbed 6.3% to $70.85 after the company announced five-year distribution agreements with USA Network and Fox Sports for its Raw and SmackDown programs.
Aquinox Pharmaceuticals dived 84.7% to $2.34 after the company said a clinical trial for its treatment of interstitial cystitis and bladder pain syndrome failed to meet its primary endpoint.
The strongest area of the market was the energy sector. Crude prices jumped after a report showed that U.S. oil inventories dropped more sharply last week. The prices already had been rising on reports that the Trump administration is pressing other countries to stop importing oil from Iran.
Crude’s rise helped drive energy stocks in the S&P 500 up 1.3%, more than double the gain for any of the other 10 sectors that make up the index.
Concho Resources, a company that looks for oil and gas in New Mexico and west Texas, jumped 4.6%, to $137.78, the biggest gain in the S&P 500.
Benchmark U.S. crude rose $2.23 to $72.76 a barrel. Brent crude, the international standard, rose $1.31 to $77.62 a barrel.
Natural gas rose 6 cents to $2.30 per 1,000 cubic feet. Heating oil rose 5 cents to $2.17 a gallon. Wholesale gasoline rose 6 cents to $2.13 a gallon.
Gold fell $3.80 to $1,256.10 an ounce. Silver fell 10 cents to $16.15 an ounce. Copper slipped a penny to $3.01 a pound.
The dollar edged up to 110.20 yen from 110.13 yen. The euro fell to $1.1557 from $1.1650, and the British pound dropped to $1.3128 from $1.3232.
The yield on the 10-year Treasury dropped to 2.82% from 2.88%. The two-year yield fell to 2.48% from 2.53%, and the 30-year sank to 2.96% from 3.02%.
UPDATES:
2:35 p.m.: This article was updated with closing prices, context and analyst comment.
This article was originally published at 7:20 a.m.
