S&P 500 may end five-day win streak as U.S.-China trade worries take center stage

U.S. stocks trended lower on Monday, with technology and consumer-discretionary stocks among the biggest drags of the day, as investors once again fretted over trade-policy uncertainty.

The modest pullback represents a slight retreat from the previous week’s solid gains, which had returned major indexes within striking distance of record levels.

The Dow Jones Industrial Average DJIA, -0.04% fell 8 points to 26,147 after briefly moving into positive territory. The S&P 500 SPX, -0.24% was off 8 points, or 0.3%, to 2,897. Should the S&P reverse and end in positive territory, that would make for its sixth straight positive session, its longest such streak since February. At current levels, the S&P is about 0.7% below record levels.

The Nasdaq Composite Index COMP, -0.77% fell 68 points, a decline of 0.9%, to 7,942.

The Dow last week logged a 0.9% weekly rise, its fourth positive week of the past five. The gains have taken it to its highest level since late January. The S&P 500 rose 1.2%, its ninth positive week of the past 11. The Nasdaq posted a gain of 1.4% for the week, its third positive week of the past four.

Recent trading on Wall Street has been muted, with tight trading ranges. The last time the S&P 500 ended with a move of 1%, in either direction, was late June.

Judith Jamison on dancing for a living, and loving it

Read: Stock-buyback mania overshadows surging growth in capital spending

Trade tensions continue to be a primary driver for market action, and the issue has received renewed focus in recent sessions as the relationship between the U.S. and China shows signs of deteriorating.

On Friday, Bloomberg reported that Trump had instructed aides to proceed with $200 billion in tariffs against Chinese products. The report come on top of billions of dollars of tariffs that have already been levied, as well as a couple of days after the White House invited Chinese officials back to the table to try to hammer out a trade deal.

Over the weekend, however, China said it may decline the offer for renewed trade talks if Trump carries out the tariff threat. “China is not going to negotiate with a gun pointed to its head,” a senior Chinese official said, according to The Wall Street Journal.

Technology stocks — including names like Amazon, which is classified as a consumer-discretionary firm — have been highly correlated to the trade issue, with investors worrying about the impact it could have on their supply chains and global demand prospects.

Broadly speaking, investors have largely shrugged off the trade issue, focusing instead on strong corporate profits and economic data, there is still a concern that the issue could escalate and have a pronounced impact on global economic growth.

Separately, investors continue to monitor the impact of former Hurricane Florence, which has weakened to tropical-depression status but is expected to cause major damage through rainfall and flooding.

Don’t miss: Trump said U.S. companies would rush to repatriate cash, but most have not

In the latest economic data, the New York Fed’s Empire State index fell 7 points to 19 in September.

“Trade is back at the forefront of the news, and tech is among the most impacted sectors” to this issue, said Chris Larkin, senior vice president of trading product at E-Trade Financial.

“Not only have tech stocks have a really nice run in 2018 — meaning the prices are a bit rich and it’s natural to see a giveback — but they’re international stocks with a lot of international exposure. A good chunk of their profits come from overseas markets, and that’s being impacted with the tariff talk.”

Consumer-discretionary stocks were among the biggest decliners in early trading, with the sector down 0.6%. The technology group fell 0.5%. All five of the so-called FAANG stocks were lower, with Amazon.com Inc.AMZN, -2.07% down 2.3% and Netflix Inc.NFLX, -2.35% down 2.3%. Apple Inc. AAPL, -1.61% fell 1.9% while Facebook FB, -0.79% lost 1.4% and Google-parent Alphabet GOOG, -0.79%GOOGL, -0.73% slid 1.2%.

Amazon’s decline came after The Wall Street Journal reported that the e-commerce giant was investigating internal leaks to root out fake reviews and other seller scams.

DowDuPont Inc. DWDP, +0.83% Chief Executive Edward Breen will assume the top executive position at the specialty-products company that will be created next year as part of the conglomerate’s years-long plan to split into three entities. Shares rose 0.9%.

Coca-Cola Co. KO, +0.25% confirmed that it was considering opportunities in CBD-infused beverages, drinks that contain cannabidiol, the non-psychoactive ingredient in marijuana. Shares of the Dow component were flat.

Tyson Foods Inc. TSN, -0.50% stock fell 0.4% after the company said Chief Executive Tom Hayes will step down for personal reasons after about two years in the role.

Mersana Therapeutics Inc. MRSN, -22.04% shares sank 15% after the U.S. Food and Drug Administration lifted a partial clinical hold on its phase I trial of its cancer treatment XMT-1522.

Shares of Cellectar Biosciences Inc.CLRB, +3.20% gained 3% after it won a rare pediatric designation for cancer treatment from the FDA.

Canopy Growth CGC, +3.71% shares rose 2.7%. The company said its Tweed Farms Inc. site has received license amendments that approve remaining greenhouse space, expanding the company’s licensed footprint to about 3.2 million square feet.

Oracle Corp. ORCL, +0.19% shares rose 0.5%. The enterprise-software giant is scheduled to report its quarterly results after the market closes.

Asian stocks fell sharply, pressured by the trade uncertainty and by a powerful typhoon. The region was extending its recent weakness. Shares in Shenzhen have slumped nearly 30% so far this year, while Hong Kong’s Hang Seng Index is down almost 20% from a recent peak. Major European indexes were slightly lower.

Crude-oil prices CLK9, -0.35% rose 0.8% on Monday, while gold GCM9, +0.62% was up less than 0.1%. The U.S. dollar index DXY, -0.49% fell 0.2% on renewed trade jitters.

Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.

Source: Read Full Article