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U.S. Stocks Close Slightly Lower Amid Uncertainty About Trade Deal

wallstreet aug30 14oct19 lt

Following the rally seen over the course of the three previous sessions, stocks showed a lack of direction throughout the trading day on Monday. The major averages spent the day bouncing back and forth across the unchanged line.

Eventually, the major averages ended the session modestly lower. The Dow dipped 29.23 points or 0.1 percent to 26,787.36, the Nasdaq edged down 8.39 points or 0.1 percent to 8,048.65 and the S&P 500 slipped 4.12 points or 0.1 percent to 2,966.15.

The choppy trading on Wall Street came amid light volume due to the Columbus Day holiday as well as renewed uncertainty about a trade deal with China.

President Donald Trump announced on Friday that the U.S. and China have reached a "very substantial phase one deal," although reports suggest China wants another round of talks before signing the agreement.

A person familiar with the matter told Bloomberg News that China may send a delegation led by Vice Premier Liu He to finalize a written deal that could be signed at the Asia-Pacific Economic Cooperation summit next month in Chile.

Another person told Bloomberg that China wants Trump to also scrap a planned tariff hike in December in addition to the hike scheduled for this week.

Trump said the deal includes up to $40 to $50 billion in Chinese purchases of U.S. agricultural products as well as Chinese concessions on intellectual property and financial services.

In exchange for the concessions by China, the U.S. agreed to hold off on an increase in tariffs originally scheduled for this week.

Trump claimed in a tweet on Sunday that China has agreed to immediately start buying large quantities of U.S. agricultural products, but the Chinese have not followed through on similar pledges in the past.

A light day on the U.S. economic front also kept traders on the sidelines, although reports on retail sales, housing starts and industrial production are likely to attract attention in the coming days.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Renewed uncertainty about the U.S.-China trade deal contributed to a sharp pullback by steel stocks, however, with the NYSE Arca Steel Index slumping by 2 percent.

Significant weakness was also visible among natural gas stocks, as reflected by the 1.4 percent drop by the NYSE Arca Natural Gas Index.

Chemical, tobacco, and utilities stocks also moved to the downside on the day, while some strength was visible among computer hardware stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday, although the Japanese markets were closed for a holiday. China's Shanghai Composite Index surged up by 1.2 percent, while Hong Kong's Hang Seng Index climbed by 0.8 percent.

Meanwhile, the major European markets moved to the downside on the day. While the German DAX Index dipped by 0.2 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index fell by 0.4 percent and 0.5 percent, respectively.

The bond markets are closed for Columbus Day. Treasuries showed a significant move to the downside last week amid renewed optimism about a U.S.-China trade deal.

Looking Ahead

Earnings news may move into the spotlight on Tuesday, with Citigroup (C), Goldman Sachs (GS), Johnson & Johnson (JNJ), and JPMorgan Chase (JPM) among the companies due to report their quarterly results before the start of trading.

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