Tariff Uncertainty Drags on US Stocks – Wall Street Journal

U.S. stocks slipped Monday as fresh trade threats between the U.S. and China stoked caution among investors.

The Dow Jones Industrial Average fell 5 points, or less than 0.1%, to 26149. The S&P 500 was down 0.2% and the Nasdaq Composite dropped 0.7%, hurt by a decline in shares of technology companies.

Signs that the U.S. trade fight with China was set to escalate this week capped stock gains and put pressure on the dollar. The Trump administration is planning to unveil new tariffs on $200 billion in Chinese goods. Chinese officials, who are debating new ways to retaliate against U.S. corporations over the tariff spat, have said they could pull out of trade talks if President Trump carries out his plans early this week.

The New York Stock Exchange in lower Manhattan on Sept. 14, 2018.


Photo:

Spencer Platt/Getty Images

“What worries me is that I can see how you get temporary cease-fires, but I still do not see the grand bargain at the end of this whole process,” said Elliot Hentov, head of policy research at State Street Global Advisors.

U.S. stock-market moves so far in response to the new tariff threat have been mostly calm, in part because the developments have been incremental and the economic impact on the U.S. has so far been minimal, analysts said.

“We already have real trade issues, but we haven’t hit that threshold where we can’t pull the bullet back in,” said Jason Ware, chief investment officer at Albion Financial Group. “If we get there, that will be truly problematic for the economy and markets,” he said.

Shares of technology-focused companies retreated Monday, weighing on the Nasdaq.

Amazon.com slid 2% after confirming a Wall Street Journal report that it was investigating suspected data leaks and bribes of employees. Twitter, whose price target was lowered by an analyst at MoffettNathanson, shed 3.7%, while Apple lost 1.5%.

Beyond trade, investors and analysts say they are looking ahead to next week’s Federal Reserve meeting, where the central bank is widely expected to raise short-term interest rates for the third time this year.

The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, fell 0.3%.

Elsewhere, the Stoxx Europe 600 swung between small gains and losses and ended up 0.1%.

Italy’s FTSE MIB Index rose 1.1% as investors bet the country’s upcoming budget wouldn’t set it on a collision course with the European Union.

The latest trade worries continued to hurt Asian stocks, with the Shanghai Composite falling 1.1% to its lowest level since November 2014 and Hong Kong’s Hang Seng dropping 1.3%.

Analysts pointed to muted trading volumes across the region resulting from Typhoon Mangkhut and a holiday in Japan, where markets were closed.

Write to Riva Gold at riva.gold@wsj.com and Akane Otani at akane.otani@wsj.com