Fresh U.S.-China trade worries push stocks down

The facade of the New York Stock Exchange.
The facade of the New York Stock Exchange.
(Richard Drew / Associated Press)

Wall Street closed out a volatile week with losses Friday as investors worried that upcoming trade talks aimed at resolving the U.S.-China trade war could be in trouble.

The selling, which erased modest early gains, ended the Standard & Poor’s 500 index’s three-week win streak. The benchmark index is still up 2.2% for September.

The market slide came as investors reacted to reports indicating Chinese officials canceled a planned trip to farms in Montana and Nebraska and would return to China. Representatives from the U.S. and China were engaging in preliminary discussions to lay the groundwork for more formal negotiations next month.


The reports about the Chinese delegation came after President Trump said at a news conference that he wants a complete deal with China and won’t accept one that addresses only some of the differences between the two nations. Trump also said he doesn’t feel he needs to secure an agreement before next year’s election.

“This is why China has been reluctant to continue to negotiate with the Trump administration, because as soon as it looks like we’re moving toward some sort of constructive talks, there is a change in direction and it seems like a lot of head fakes,” said Ben Phillips, chief investment officer at EventShares.

Markets rallied this month after the United States and China took steps to ease tensions in advance of their next round of talks. That had fueled speculation among investors that the two countries may at least reach an interim deal on trade.

The S&P 500 fell 14.72 points, or 0.5%, to 2,992.07. The Dow Jones industrial average fell 159.72 points, or 0.6%, to 26,935.07.

The Nasdaq lost 65.20 points, or 0.8%, to 8,117.67, weighed down by technology-sector stocks. The Russell 2000 index of smaller-company stocks slipped 1.71 points, or 0.1%, to 1,559.76.

Despite Friday’s selling, the S&P 500 remains relatively close to its all-time high. The benchmark index largely held steady this week despite volatility caused by a swing in oil prices and the Federal Reserve’s latest interest rate cut.

On Monday, oil prices soared more than 14% after a key Saudi Arabian oil processing facility was attacked. Oil prices retreated after the Saudi government said production could be restored by the end of the month, although the prices are still up nearly 6% for the week.

The Federal Reserve cut interest rates for the second time this year as it tries to shore up economic growth amid the U.S.-China trade war and weak economic growth overseas. The central bank left open the possibility of additional rate cuts if the U.S. economy weakens.

“The market is at a pretty fragile point right now,” Phillips said. “It’s at all-time highs and there are risks, it seems like, building everywhere globally, with trade being the biggest one.”

Technology stocks accounted for the biggest share of the market’s losses. The sector is particularly sensitive to swings on the trade conflict because many companies manufacture products in China. Apple declined 1.5%. Microsoft slid 1.2%.

Retailers and other companies that benefit from consumer spending also declined broadly. Amazon fell 1.5%. Starbucks dropped 1.6%.

Financial stocks stumbled as bond yields declined. The yield on the 10-year Treasury fell to 1.72% from 1.77%. Bond yields, which can affect interest rates on mortgages and other consumer loans, slid steadily all week.

Netflix slid 5.5%, leading communications services companies downward. In an interview with Variety published Friday, Netflix CEO Reed Hastings acknowledged that the company faces tough competition from Disney, Apple and other companies rolling out streaming services in November. Netflix shares are down nearly 26% this quarter.

Roku plunged 19.2% as investors worried that the shake-up in streaming will push down the prices Roku can command for its video-streaming devices.

Healthcare and utilities stocks rose. Johnson & Johnson gained 1.2%. Exelon climbed 1.4%.

Semiconductor maker Xilinx tumbled 6.8% as its chief financial officer, Lorenzo Flores, leaves the company for Toshiba Memory Holdings, where he will be vice chairman. Flores will stay at Xilinx through its second-quarter financial report.

Benchmark crude oil fell 4 cents to settle at $58.09 a barrel. Brent crude oil, the international standard, fell 12 cents to close at $64.28 a barrel.

Wholesale gasoline fell 2 cents to $1.68 a gallon. Heating oil fell 1 cent to $1.99 a gallon. Natural gas fell 1 cent to $2.53 per 1,000 cubic feet.

Gold rose $8.90 to $1,507.30 an ounce. Silver fell 3 cents to $17.74 an ounce. Copper stayed at $2.59 a pound.