Healthcare companies led stocks lower on Wall Street on Monday as investors waited for more details on reports that the United States and China are moving closer to a deal to resolve their costly trade dispute.
The sell-off was most pronounced in sectors that have shown strong gains over the last two months, including healthcare and technology. Financial stocks also took heavy losses.
The world’s two largest economies have pulled back from an immediate escalation of their trade war since they started negotiating last month. President Trump postponed a deadline for raising tariffs on more Chinese goods, citing progress in a series of talks. Now, media reports say the nations could strike a deal this month.
“The devil is still in the details, and those details are still pretty sparse,” said David Lefkowitz, senior Americas equity strategist at UBS Global Wealth Management. “When tariffs might be removed is definitely a key question, and also there’s still some uncertainty about whether or not a deal will be consummated.”
The Standard & Poor’s 500 index fell 10.88 points, or 0.4%, to 2,792.81. The index, a benchmark for many mutual funds, is still up 11.4% so far this year.
The Dow Jones industrial average fell 206.67 points, or 0.8%, to 25,819.65.
The Nasdaq composite slipped 17.79 points, or 0.2%, to 7,577.57. The Russell 2000 index of smaller companies declined 14.20 points, or 0.9%, to 1,575.44.
Optimism that a U.S.-China trade pact could be finalized soon gave markets an early boost Monday, but the rally faded as traders sized up mixed data on U.S. construction spending.
The Commerce Department said construction spending edged down 0.6% in December amid declines in residential construction and government projects. Even with the December setback, construction spending for all of 2018 reached record levels, though it was the smallest increase in seven years.
“It gave people an excuse to sell,” said JJ Kinahan, chief market strategist for TD Ameritrade.
The construction spending report was good news for home builders, which bucked the broader market trend. PulteGroup climbed 3.5%. D.R. Horton rose 3.1%.
In the healthcare-sector sell-off, UnitedHealth Group slid 4.1%, the biggest loss among the 30 stocks in the Dow.
Technology companies and banks also fell. Salesforce.com sank 3.7%. Charles Schwab lost 2.5%.
AT&T declined 2.7% on news the telecom company is reorganizing its WarnerMedia unit, which includes HBO and Warner Bros.
Children’s clothing retailer Children’s Place skidded 10.3% after it reported a disappointing fourth quarter and gave investors a dismal forecast. The main issue is competition from dying competitors holding liquidation sales. Its rivals Gymboree and Crazy 8 have been in the process of shutting down stores, which means liquidation sales and better deals for shoppers.
“We have never experienced a total liquidation of a direct competitor of the size and proximity of Gymboree,” Children’s Place Chief Executive Jane Elfers said in a statement.
Gap faltered 6% after the clothing retailer said it is buying the assets of bankrupt children’s fashion retailer Janie & Jack for $35 million. Gap leaped last week after saying it would split into two companies.
Gene therapy developer Nightstar Therapeutics soared 66.1% after biotech giant Biogen offered to buy it for $877 million in cash. Nightstar is developing treatments for rare eye conditions. Biogen and other large drug developers have been trying to expand their portfolios to include gene therapy and treatments for rare conditions. Those treatments are expensive to develop, but they command better prices if they make it to market.
Blue Apron slumped 13.1% to 94 cents, falling below the $1 threshold. The at-home meal-kit company dropped 26% last week, with much of the losses coming after Bloomberg reported that an offering of 15 million shares was priced at a discount.
U.S. crude oil rose 1.4% to $56.59 a barrel in New York. Brent crude, used to price international oils, rose 0.9% to $65.67 a barrel in London.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.73% from 2.75%.
The dollar fell to 111.94 yen from 112.01 yen. The euro weakened to $1.1325 from $1.1357.
Gold fell 0.9% to $1,287.50 an ounce. Silver fell 1% to $15.11 an ounce. Copper fell 0.8% to $2.91 a pound.
Wholesale gasoline climbed 1.1% to $1.75 a gallon. Heating oil rose 0.7% to $2.01 a gallon. Natural gas slipped 0.1% to $2.86 per 1,000 cubic feet.