U.S. stocks snapped a four-day winning streak to finish lower Thursday, with the Dow falling back below 26,000, on a report that President Donald Trump is likely to press ahead with tariffs against $200 billion worth of Chinese products.
Trade-related news has played a central role in the market recently amid worries that heightened tensions between U.S. and its major trading partners could not only hamper U.S. economic growth but derail the global economy at large.
How did major indexes fare?
The Dow Jones Industrial Average DJIA, -0.53% fell 137.65 points, or 0.5%, to 25,986.92. The S&P 500 index SPX, -0.44% lost 12.91 points, or 0.4%, to 2,901.13. The Nasdaq Composite Index COMP, -0.26% fell 21.32 points, or 0.3%, to 8,088.36 after earlier testing an intraday record of 8,133.30.
What factors drove the market?
Trump reportedly wants to move ahead with his plan to slap tariffs on billions in additional Chinese imports as early as next week, Bloomberg News reported, citing people familiar with the matter. Companies have until Sept. 6 to comment on the proposed duties and Trump wants to impose the tariffs once that deadline passes.
Recent gains on Wall Street had come on a belief that disagreements between the U.S. and its major trading partners may be easing. Late Tuesday, Canadian Foreign Minister Chrystia Freeland met with Trump administration officials in an attempt to resolve testy discussions between the two countries on trade, coming on the heels of the U.S. and Mexico’s announcement of progress toward a bilateral trade agreement that may ultimately result in a retooling of the trilateral North American Free Trade Agreement.
Investors, who had viewed these events as signs of progress that could help the economy avoid a full-blown trade war, are expected to turn more jittery if Trump remains aggressive about penalizing trade partners on what he perceives are unfair policies.
Market participants are already on the edge about global risk adversely affecting U.S. stocks, given currency woes in Argentina and Turkey as confidence in the governments to rehabilitate their respective economies deteriorated further.
Read: Argentine peso plunge, Turkey woes keep emerging markets in spotlight
What data were in focus?
Initial jobless claims, a barometer of layoffs, rose by 3,000 to 213,000 in the week ended Aug. 25. Economists polled by MarketWatch had forecast a 212,000 reading. Nonetheless, the monthly average of claims fell by 1,500 to 212,250, the lowest level since December 1969.
Consumer spending climbed 0.4% in July, according to a government reading, matching the estimate of economists polled by MarketWatch. Incomes rose 0.3%. And the 12-month increase in the PCE index, the Federal Reserve’s preferred inflation gauge, rose to 2.3% from 2.2%, marking the highest level since April 2012, suggesting the Fed is likely to maintain its hawkish bias.
What were market analysts saying?
Global risk is back in the spotlight, said Jack Ablin, chief investment officer at Cresset Wealth Advisors, with emerging-market currencies taking a hit. Investors are also fretting over the implications of higher interest rates in the wake of the latest inflation data.
Reports that the U.S. and Mexico have reached a preliminary deal is “alleviating some of the uncertainty faced by businesses surrounding trade and supply chains between the two countries,” said Niladri Mukherjee, head of CIO portfolio strategy at Merrill Lynch and U.S. Trust.
“We feel that the potential for Canada to return to the negotiations would be a positive signal for the prospects of a more comprehensive deal and could support investor sentiment…any de-escalation of trade hostilities could drive equities higher,” he said.
What stocks were in focus?
Salesforce.com Inc. CRM, -1.72% fell 1.7% after issuing a third-quarter outlook that was below expectations but reported quarterly results that came in ahead of forecasts.
Apple Inc. AAPL, +0.92% gained 0.9% following an announcement that it will host an event on Sept. 12 where the company is expected to announce its latest iteration of the iPhone.
Campbell Soup CPB, -2.10% shares fell 2.1% after the food company reported quarterly sales that missed expectations. It also plans to sell its international operations and refrigerated-foods business, abandoning efforts to become a more fresh food-oriented company and leaving the door open to a full sale.
Ciena Corp. CIEN, +12.45% jumped 13% after it reported third-quarter results that beat expectations.
Signet Jewelers Ltd. SIG, +23.84% soared 24% after it reported second-quarter results that were much stronger than expected. It also raised its full-year outlook.
Electronic Arts Inc. EA, -9.79% sank 9.8% after it pushed back the release date for its “Battlefield V” game by four weeks to Nov. 20 and tweaked its guidance for net bookings to reflect the later release.
Dollar Tree Inc. DLTR, -15.54% shares tumbled 16% after CFRA cuts its price target on the stock to $100 from $105.
What were other markets doing?
European stocks SXXP, -0.32% fell broadly and Asian markets finished mostly lower.
Gold futures GCZ8, -0.48% settled lower, while the ICE U.S. Dollar Index DXY, +0.15% edged up and U.S. crude-oil futures CLV8, +0.91% rose.
—Ryan Vlastelica contributed to this article
Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.