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U.S. stocks were lower midday Wednesday after China condemned a U.S. Senate resolution supporting human rights in Hong Kong and President Donald Trump threatened to boost tariffs if Washington and Beijing are unable to negotiate a trade agreement.
Wall Street also awaited minutes from the Federal Reserve’s October meeting to glean further insights about its monetary policy, though Chairman Jerome Powell last week outlined his thoughts about the economy in congressional testimony.
How are major benchmarks faring?
The Dow Jones Industrial Average DJIA, -0.78% was about 74 points, 0.3%, lower, at 27,859, while the S&P 500 SPX, -0.77% lost about 6 points, 0.2%, at 3,115. The Nasdaq COMP, -1.03% , which briefly traded above the neutral line in the late morning, was less than a point lower, at 8,562.
On Tuesday, the Nasdaq Composite COMP, -1.03% gained 20.72 points, or 0.2%, to a record 8,570.66, its third consecutive record close. The Dow Jones Industrial Average DJIA, -0.78% fell 102.20 points, or 0.4%, to close at 27,934.02 while the S&P 500 index SPX, -0.77% shed 1.85 point or 0.1% to end the session at 3,120.18.
Read: How can stocks rally when corporate profits are flat? Thank the bond market, analyst says
What’s driving the market?
After the U.S. Senate late Tuesday approved a bill to support human rights in Hong Kong following months of often-violent unrest in the semi-autonomous Chinese city, China responded by threatening to take “strong countermeasures” if Congress proceeds with passage of the bill.
The diplomatic spat may also be affecting trade talks between the U.S. and China which are in danger of hitting an impasse, threatening to derail the Trump administration’s plan for a limited “phase-one” pact this year, according to the Wall Street Journal, citing former administration officials.
Both sides remain divided over core issues—including Beijing’s demand for removing tariffs and the U.S.’s insistence on China buying farm products—nearly six weeks after an “agreement in principle” was announced by the White House on Oct. 11.
Earlier on Tuesday President Donald Trump said at a cabinet meeting that China needs to make a deal he likes to avoid import tariffs going even higher, with fresh levies set to go into effect Dec. 15, directly hitting American consumers.
“What we’re seeing in the market today is another reminder that tariffs reign supreme,” says TD Ameritrade chief market strategist JJ Kinahan.
“You can have great results from two of the biggest retailers – Target and Lowes – but what seems to matter most of all is if headlines go south on trade.”
David Madden, market analyst at CMC Markets UK, was sanguine on the idea of talks resuming. “Beijing have a track record of standing up to Trump so the trading relationship is likely to be strained in the near-term,” he said in a note to clients.
Meanwhile, Federal Reserve Board governor Lael Brainard said she supported a pause in interest-rate policy after the three rate cuts engineered since July as she expects the U.S. economy should be able to shake off trade uncertainty and continue on a moderate expansion path through 2020.
The Fed will release minutes of its October meeting at 2 p.m. Eastern Time. Economists are looking for a sense of how long the Fed pause might last.
See: Here’s what may drive stocks even higher (hint: not the trade war or the Fed)
Which stocks are in focus?
Shares of Target Corp. TGT, +11.93% roared to a record Wednesday, after the discount retailer reported fiscal third-quarter profit and revenue that rose above expectations, and raised its full-year outlook.
Lowe’s Cos. LOW, +3.74% said net income from its third-quarter ending Nov. 1 jumped to $1.05 billion, or $1.36 a share, from $629 million, or 78 cents a share. Shares of the home improvement retailer also touched a new high.
Bristol-Myers Squibb Co. BMY, -0.96% slid in morning trading, after the drug company said a trial of a drug called opdivo plus yervoy in patients who have had surgery to treat melanoma failed to meet its main goal.
Shares of AT&T T, -4.03% fell about 3%, down for the second-straight day, after closing at a long-time high on Monday. Analysts at KeyBanc warned of “further deterioration” in video.
Intelsat S.A. I, +12.64% shares extended their rally after a steep decline earlier in the week following a Raymond James downgrade. The stock is still down nearly 50% for the week to date.
Apple AAPL, -1.89% was lower after announcing Wednesday it has started construction of its new $1 billion, 3-million-square-foot campus in Austin, Texas, which will initially employ 5,000 people. President Trump is scheduled to tour the company’s manufacturing facility in Austin on Wednesday.
How are other markets trading?
U.S. Treasury yields edged lower amid doubts on trade, with the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -2.73% at 1.760%, compared with 1.785% on Tuesday.
Gold GCZ19, -0.25% slipped after a gain on Tuesday, with bullion off 0.4% at $1,467.90 an ounce on Comex.
Oil CL00, +2.87% bounced after sinking a day ago, up 2% at $57.33 a barrel on the New York Mercantile Exchange, marking its lowest settlement in November.
The ICE U.S. Dollar Index DXY, +0.12%, representing a basket of the greenback’s trading rivals, was up 0.1%.
Meanwhile, the Stoxx Europe 600 SXXP, -0.41% was lower by about a point, or 0.4%.
In Asia overnight Wednesday, stocks traded mixed, with the China CSI 300 000300, -0.99% shedding 1%, Japan’s Nikkei 225 NIK, -0.62% falling 0.6% and Hong Kong’s Hang Seng HSI, -0.75% down 0.8%.
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