U.S. stocks ended lower Monday, with the Dow notching a 105 point decline, as investors kept a close eye on trade negotiations ahead of Sunday’s tariff deadline and policy updates from global central banks.
How did major benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -3.15% retreated 105.46 points, or 0.4%, at 27,909.60, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -3.03% lost 9.95 points, or 0.3%, at 3,135.96 and the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -2.77% shed 34.70 points, or 0.4%, at 8,621.83.
Despite Monday’s losses that snapped a three-day winning streak, all three benchmarks were less than 1% of their closing highs, set on Nov. 27.
What drove the market?
Traders awaited monetary-policy updates from the Federal Reserve, starting on Tuesday, and from new European Central Bank on Thursday, with investors hoping to gather clues on the state of the global economy and the longer-term outlook for interest rates.
But on Monday, the state of U.S.-China talks loomed large, given a Dec. 15 deadline for 15% import duties on $156 billion of annual consumer imports. Some experts, however, have speculated that the President Donald Trump may delay implementing tariffs as the parties work toward a lasting detente.
“There is a lot of uncertainty heading into Dec. 15 about what the president is going to do,” said Robert Pavlik, chief market strategist at SlateStone Wealth, in an interview with MarketWatch. But he also pointed out that “people are not running for the hills.”
“If you saw all of the more defensive areas of market were leading today, that would give you a different message that people are worried and moving to the sidelines,” Pavlik said.
On Friday, anxious stock-market investors shook off tariff concerns to focus on the strength of the U.S. labor market. The U.S. economy created 266,000 new jobs in November, the Labor Department reported, marking the biggest gain since January, signaling job growth remains robust even though economic growth has slowed.
“The recession fears that pervaded much of the year are fading, replaced by a sense that economic indicators are bottoming,” wrote JPMorgan & Co. analysts in their 2020 equity outlook released on Monday.
The analysts also said they anticipate no further trade-war escalation ahead of next year’s U.S. presidential race and “a synchronized global recovery” to take hold instead, while stressing that the current slowdown is only a “third intra-cycle reset” that “will not mark an end to this cycle.”
Meanwhile, economic reports out of China indicate that trade tensions have hurt the world’s second-largest economy, as China’s exports unexpectedly dropped 1.1% in November from a year earlier, while shipments to the U.S. fell 23%, data from the General Administration of Customs showed over the weekend.
China’s commerce ministry on Monday said Beijing hopes trade negotiations with the U.S. will result in a “satisfactory” outcome soon, according to reports.