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U.S. stocks ended lower Tuesday, setting a two-day losing streak, as a looming Dec. 15 deadline for additional tariffs on Chinese goods weighed down Wall Street.
Investors also were digesting news of a revised North American free trade pact and awaiting insights from a Federal Reserve policy meeting that got under way at 10 a.m. Eastern Time.
How did major benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.20% shed 27.88 points, or 0.1%, at 27,881.7, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.83% gave up 3.44 points, or 0.1%, at 3,132.52, while the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.74% lost 5.64 points, or less than 0.1%, at 8,616.18.
On Monday, the Dow retreated 105.46 points, or 0.4%, at 27,909.60, while the S&P 500 index lost 9.95 points, or 0.3%, at 3,135.96 and the Nasdaq Composite Index shed 34.70 points, or 0.4%, at 8,621.83.
All three benchmarks ended Tuesday within 1% or less of their record closes set nearly two weeks ago on Nov. 27, according to Dow Jones Market Data.
What drove the market?
Investors have been reconciling conflicting signals on Tuesday about the status of trade negotiations between Washington and Beijing.
Acting White House chief of staff Mick Mulvaney told attendees at The Wall Street Journal’s CEO Council summit in Washington on Tuesday that additional tariffs of 15% on consumer goods from China are “still on the table” and could set in on Dec. 15, even as progress toward an interim accord is being made.
But before the start of trade, The Wall Street Journal reported that U.S. and Chinese trade negotiators are “laying the groundwork for a delay” of the new tariffs. President Donald Trump’s economic adviser Larry Kudlow also said fresh tariffs are “still on the table.”
“A delay was in the offing this morning. Now maybe it’s not,” said Jamie Cox, managing partner for Harris Financial Group, in an interview with MarketWatch. “I think it’s part and parcel of how these negotiations are done,” he said. “But I highly doubt they will implement the Dec. 15 tariffs now that we are in the middle of impeachment.”
Global stocks were lower following a separate report that indicated U.S. lawmakers are working on a new bill that would bar the use of federal funds to buy Chinese buses and railcars, a move likely to complicate efforts for a partial trade U.S.-China deal.
Sources close to the talks told the South China Morning Post that “it is growing increasingly unlikely that a U.S.-China trade deal will be completed this week,” though the same officials also said they expected a delay of additional tariffs to give the world’s two-largest trading partners more time to work out a deal.
Speaker of the House Nancy Pelosi on Tuesday morning also announced a deal with the White House on a revised U.S.-Mexio-Canada trade accord (USMCA), meant to replace the North American Free Trade Agreement, or Nafta. The deal includes stronger labor enforcement rules and environmental protections than the pact the Trump administration negotiated with Canada and Mexico last year.
Others were looking forward to the news cycle no longer being dominated by the latest blows on trade.
“It’s not helpful when investors see the word ‘tariffs’ or ‘recession’ constantly in headlines,” Crista Huff, Chief Analyst at Cabot Undervalued Stocks Advisor, told MarketWatch.