Stocks Slip as Investors Brace for Looming Trade Deadline
Stocks dipped on Tuesday as a looming U.S.-China trade deadline dampened investor sentiment.
TheÂ Dow Jones Industrial AverageÂ closed 27.88 points lower, or 0.1% at 27,881.72. TheÂ S&P 500Â also lost 0.1% to close at 3,132.52. TheÂ Nasdaq Composite dipped 0.1% as well to 8,616.18, dragged down by Netflix.
China and the U.S. have until Sunday to come strike a so-called phase one trade deal. If an agreement wasnâ€™t reached by then, new U.S. tariffs will take effect.
The Wall Street Journal reported the U.S. plans to delay slapping China with additional tariffs as both sides try to work out the agreement. U.S. negotiators have also asked Chinese officials to commit to some agricultural purchases up front before moving forward with a deal, the report added. Meanwhile, China wants its agricultural purchases to be proportional with the amount of tariffs the U.S. rolls back.
The U.S. is also reportedly pushing for a quarterly review of the promised purchases. The report initially sent stock futures higher earlier in the day, but the excitement did not last long.
â€œItâ€™s nothing official yet. Thatâ€™s the thing,â€ said Quincy Krosby, chief market strategist at Prudential Financial. â€œMarket participants are so used to headlines turn out to not be true that they are waiting to see what will be confirmed by administration officials.â€
CNBCâ€™s Jim Cramer said he was skeptical of the report. â€œMy understanding is the president doesnâ€™t know anything about this right now,â€Â Cramer said.
White House economic advisor Larry Kudlow also said the Dec. 15 tariffs are still â€œon the table,â€ increasing the skepticism around the dayâ€™s earlier reports.
Before the bell, Dow futures were down more than 100 points earlier in the day after the South China Morning Post said China and the U.S. are unlikely to reach a trade deal this week.
That report said chances of a deal on that front are falling as the U.S. focuses on finalizing a trade deal with Mexico and Canada. House Democrats and the Trump administration said Tuesday they reached a deal to move forward with the U.S.-Mexico-China trade agreement. The iShares MSCI Mexico ETF (EWW), which tracks Mexican stocks, rose 1.7% on the news.
Investors also kept an eye on theÂ Federal ReserveÂ as the central bank kicked off its last two-day monetary policy meeting of the year. The Fed is expected to hold rates steady.
â€œWe still expect the pressure to be on the Fed for lower not higher [rate], but clearly Fridayâ€™s employment number has that bar for more cuts very high,â€ said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities, in a note. â€œIn many ways, the bar for hikes even higher.â€
Netflix fell 3.1% after an analyst atÂ Needham downgraded it to underperform from hold, citing concerns the video streamer could lose as many as 4 million U.S. subscribers. â€œWe downgrade NFLX because it has consistently stated it will not have advertising, which we believe will result in U.S. sub losses,â€ wrote the analyst.
â€”CNBCâ€™s Sam Meredith contributed to this report.
By: Fred ImbertÂ