Wall St falls on concerns of protracted trade dispute

Wall St falls on concerns of protracted trade dispute

Stock valuations have climbed to levels reached just before Wall Street's late 2018 plunge, leaving the market at risk of shocks such as the sell-off this week as global trade tensions mounted.

FILE PHOTO: Traders work on the floor at the NYSE in New York
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 7, 2019. REUTERS/Brendan McDermid

REUTERS: U.S. stocks fell on Friday, as investors worried over the possibility of a long-drawn-out U.S.-China trade dispute, but hopes that the two sides could still reach a last-minute deal limited losses.

President Donald Trump said he was in "absolutely no rush" to finalize a trade agreement with China, after the United States increased duties to 25per cent on US$200 billion worth of Chinese goods overnight.

But even as Beijing threatened retaliation, negotiators in Washington agreed to stay on for a second day, raising expectations that a deal would be reached.

"Everyone knows that the United States and China are talking, and are looking at the tariffs as a bargaining chip. It's all about leverage and who outmaneuvers whom," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

"In the end Trump will get a deal done, but in the interim we have to put up with his way of doing it. We are going to have a lot of volatility, until we have clarity."

Boeing Co, the single largest U.S. exporter to China, declined 0.7per cent, while Caterpillar Inc dropped 0.9per cent.

At 9:40 a.m. ET, the Dow Jones Industrial Average was down 77.76 points, or 0.30per cent, at 25,750.60. The S&P 500 was down 8.18 points, or 0.28per cent, at 2,862.54 and the Nasdaq Composite was down 20.37 points, or 0.26per cent, at 7,890.22.

The spike in tensions has triggered a flight to safety and triggered a 2.8per cent drop in the S&P 500 so far this week, setting the benchmark index to post its worst weekly decline since December.

Global equities have seen outflows of US$20.5 billion in the past week as "trade deal trauma" pushed more money into bonds, Bank of America Merrill Lynch said in a report.

Longer-dated U.S. Treasury yields were hovering at five-week lows due to the trade jitters and tame inflation data.

Technology stocks fell 0.33per cent, and weighed the most on the S&P, dragged down by shares of iPhone maker and a plunge in Symantec Corp.

The antivirus software maker tumbled 15.2per cent after issuing a profit warning and unexpectedly announcing that its chief executive officer would step down.

Amid market uncertainty, ride-hailing company Uber Technologies Inc is set to make its market debut after raising US$8.1 billion in the largest U.S. IPO since 2014.

Booking Holdings rose 4 percent, the most on the S&P and Nasdaq indexes, after the online travel and restaurant reservation provider reported better-than-expected room bookings in the latest quarter.

Declining issues outnumbered advancers for a 1.47-to-1 ratio on the NYSE and for a 1.62-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and three new lows, while the Nasdaq recorded 14 new highs and 33 new lows.

(Reporting by Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila)

Source: Reuters