NEW YORK (Reuters) – Wall Street’s three main indexes were lower on Monday after a new round of U.S.-China trade tariffs kicked in and investors expected an interest rate hike a day ahead of the U.S. Federal Reserve’s two-day meeting.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 20, 2018. REUTERS/Brendan McDermid
Investors’ nerves were also rattled by reports about whether U.S. Deputy Attorney General Rod Rosenstein would quit. But indexes steadied after the White House announced a Thursday meeting between President Donald Trump and Rosenstein, who oversees the special counsel’s probe into Russia’s role in Trump’s 2016 election.
Seven of the 11 major S&P sectors were lower after U.S. tariffs on some $200 billion worth of Chinese goods took effect, along with Beijing’s retaliatory duties.
“Investors are resigned to the fact this is going to be an ongoing situation for a while,” said Brad McMillan, Chief Investment Officer for Commonwealth Financial Network, in Waltham, Mass., referring to the U.S.-China trade spat. “There’s still some feeling this is a slow-moving train. It’s not too late to stop the train or bring it back to the station, but the fact is that the train has left the station.”
At 2:56 p.m. ET, the Dow Jones Industrial Average .DJI fell 164.33 points, or 0.61 percent, to 26,579.17, the S&P 500 .SPX lost 10.43 points, or 0.36 percent, to 2,919.24 and the Nasdaq Composite .IXIC dropped 1.07 points, or 0.01 percent, to 7,985.89.
The industrial sector .SPLRCI, which has borne the brunt of the protracted trade war, was the biggest drag on the S&P with a 1.2-percent drop. Interest rate sensitive sectors such as Consumer Staples .SPLRCS, down 1.5 percent, and Real Estate .SPLRCREC, off 1.9 percent, were under pressure ahead of the Fed meeting.
The biggest percentage gainer among the S&P sectors was energy .SPNY as oil prices rose. Other gainers included the re-branded and expanded “communications services” index .SPLRCL and the technology sector .SPLRCT.
The White House announced a meeting between Trump and Rosenstein after a flurry of conflicting reports about whether Rosenstein, a frequent target of Trump’s anger, would be leaving.
“Markets have gotten accustomed to a pretty high level of political noise from Washington,” said Commonwealth’s McMillan. “With the fundamentals solid, we’ve seen that noise can shake confidence but hasn’t really brought it down.”
The technology sector .SPLRCT cut earlier losses and was flat, lifted by Apple (AAPL.O), whose products have been spared from new tariffs. Apple climbed 1.2 percent.
The communications services index, which now houses media stocks besides telecom companies, opened lower in its debut. But it showed a 0.2-percent gain by late afternoon as new member Netflix (NFLX.O) climbed 2 percent.
Other members Twenty-First Century Fox (FOXA.O) and Walt Disney (DIS.N) rose 1.5 percent and 2 percent, respectively, after losing an auction for Sky Plc (SKYB.L) to Comcast (CMCSA.O), which slid 6 percent.
Michael Kors Holdings Ltd (KORS.N) tumbled 7.6 percent after reports citing unnamed sources said the fashion group has agreed to take control of Italy’s Versace in a deal that could value the company at $2 billion.
Declining issues outnumbered advancing ones on the NYSE by a 1.98-to-1 ratio; on Nasdaq, a 1.62-to-1 ratio favored decliners.
The S&P 500 posted 17 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 38 new highs and 44 new lows.
Additional reporting by Shreyashi Sanyal in Bengaluru, additional reporting by Chuck Mikolajczak; Editing by Anil D’Silva and Nick Zieminski