Stocks dip on tariff fears as oil prices surge to 4-year high
Global stocks took small losses Monday after China reportedly pulled out of trade talks with the U.S.
Industrial companies and banks suffered some of the worst declines among American stocks.
The U.S. and China officially began taxing larger amounts of each other’s goods Monday, and the Wall Street Journal reported that China pulled out of talks that could have led to a new round of negotiations to end the trade war.
The U.S. is now taxing an additional $200 billion in Chinese imports at a rate of 10%, and China added taxes of 5% to 10% on $60 billion in U.S. products. Oil prices jumped after OPEC decided not to produce more oil.
Technology and healthcare companies rose, leaving U.S. indexes only slightly lower.
“The market’s been remarkably resilient over the last couple of months while trade tensions were heating up,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
Sandven said the trade spat will endure past the midterm elections in November, but stocks are likely to keep rising because of strong earnings growth for U.S. companies, combined with low inflation and low interest rates.
The S&P 500 index fell 10.30 points, or 0.4%, to 2,919.37. The Dow Jones industrial average lost 181.45 points, or 0.7%, to 26,562.05. Both the S&P 500 and Dow set record highs last week.
The Nasdaq composite rose 6.29 points, or 0.1% to 7,993.25. The Russell 2000 index of smaller-company stocks dropped 7 points, or 0.4% to 1,705.32.
After a volatile stretch early this year, the S&P hasn’t risen or fallen 1% in a day since late June.
Sandven said this year’s stock gains have been concentrated in technology, retail and healthcare companies. That was the case Monday, as Apple gained 1.4% to $220.79 and drug and infant formula maker Abbott Laboratories advanced 3.5% to $71.44. Sandven said it would be an encouraging sign for the market if other sectors do better.
U.S. investors were occupied with other news. OPEC and key allies including Russia decided not to increase their oil output further. Production is falling in some OPEC nations, including Iran, which faces new sanctions from the U.S.
Benchmark U.S. crude gained 1.8% to $72.08 a barrel in New York, while Brent crude, the international standard for oil prices, rose 3% to $81.20 a barrel in London, its highest price in more than three years.
Airlines and other transportation companies fell as investors anticipated they will have to pay higher prices for fuel.
On Saturday, Comcast won an auction for majority control of British satellite TV giant Sky. Its final offer was worth about $39 billion and topped an offer from 21st Century Fox, which is already a major Sky shareholder.
In London, Sky shares jumped 8.6%. Comcast sank 6% to $35.63, while Fox rose 1.5% to $45.01. Walt Disney, which is buying Fox, climbed 2.1% to $112.77.
Subscription radio company Sirius XM says it’s buying music streaming service Pandora Media. The deal will expand its service beyond cars and into homes and other areas. The companies valued the deal at about $3.5 billion in stock.
Sirius sank 10.3% to $6.26 and Pandora slid 1.2% to $8.98.
An Italian newspaper reported that the Versace group is on the verge of announcing that it will be acquired, and Bloomberg and Reuters reported that luxury fashion and handbag maker Michael Kors is the buyer. The Italian publication, Corriere della Sera, said the deal is worth $2.4 billion.
Michael Kors stock skidded 8.2% to $66.71.
Markets in Europe edged lower while Asian indexes took sharper losses. Germany’s DAX fell 0.6%, and the CAC 40 in France lost 0.3%. The FTSE 100 in Britain dipped 0.4%. Hong Kong’s Hang Seng index fell 1.6%, and India’s Sensex gave up 1.5%. Markets in Japan and South Korea were closed for national holidays.
Marijuana-related companies continued to make dramatic moves. Biotechnology company Intrexon soared 31.5% to $19.07 in heavy trading after it said it engineered a strain of yeast to produce chemical compounds found in marijuana consistently and at low cost. Scientists say that’s been a problem in researching the drug.
Canadian medical marijuana company Tilray sank 19.1% to $99.50, its third consecutive big loss. Before that, the stock’s value nearly tripled over the course of a week and a half.
Bond prices fell. The yield on the 10-year Treasury note rose to 3.08% from 3.06%.
Gold added 0.3% to $1,204.40 an ounce. Silver lost 0.1% to $14.34 an ounce. Copper fell 0.8% to $2.84 a pound.
The dollar rose to 112.73 yen from 112.52 yen. The euro edged up to $1.1758 from $1.1747.
3 p.m: This article was updated with additional analysis.
1:40 p.m.: This article was updated with closing prices.
8:45 a.m.: This article was updated with more detail about stock and commodity price movements.
This article was originally published at 7:05 a.m.
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