The U.S. stock market switched direction toward the closing bell to finish mostly lower Wednesday as worries over U.S.-China trade talks lingered. The dramatic reversal extended losses by the S&P 500 and Nasdaq for a third straight session.
How did the benchmark indexes fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.17% bucked the trend by edging up 2.24 points to 25,967.33. The S&P 500 /zigman2/quotes/210599714/realtime SPX +1.23% fell 4.63 points, or 0.2%, to 2,879.42, while the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.17% dropped 20.44 points, or 0.3%, to 7,943.32.
On Tuesday, the Dow tumbled 1.8% to 25,965.09, suffering its largest percentage decline since Jan. 3, while the S&P 500 dropped 1.7%, to 2,884.05. The Nasdaq fell 2%, to 7,963.76. The S&P 500 and Nasdaq saw their biggest daily declines since March 22, according to FactSet data.
What drove the market?
China-U.S. tariff tensions have buffeted assets perceived as risky, such as equities, and the belligerent tone from the White House caught many investors by surprise after having anticipated a tidy pact to the protracted talks coming to fruition soon.
On Wednesday, a notice in the Federal Register formally laid the groundwork to raise tariffs on $200 billion of Chinese imports to 25% from 10% early Friday, following through on remarks Monday by U.S. Trade Representative Robert Lighthizer regarding such a move. The prospect of higher tariffs was first raised Sunday by President Donald Trump, rattling investors who had anticipated better progress toward a near-term resolution.
Trump once again weighed in on the negotiations via Twitter on Wednesday, saying that the Chinese are now “coming to the U.S. to make a deal,” implying they had previously been slow-walking the negotiations in the hope that Trump would be voted out of office in 2020.
Indeed, Beijing has said top trade envoys, including Vice Premier Liu He, will head to Washington on Thursday to resume negotiations.
China’s diplomatic contingent had attempted to revamp a nearly 150-page draft trade agreement, as they were reluctant to agree to signing new trade terms into law, raising the ire of U.S. negotiators, according to Reuters .
Adding to policy uncertainty, Iran said it may cease compliance with portions of a 2015 nuclear deal it signed with the U.S., Britain, France, Germany, China and Russia. Iranian President Hassan Rouhani said that it would begin stockpiling heavy water and low-enriched uranium unless non-U.S. signatories take steps to shield the Iranian economy from Trump-administration sanctions that have been crippling its economy.