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Renewed Uncertainty About Trade Deal Leads To Weakness On Wall Street

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Stocks climbed well off their worst levels of the day but still ended Wednesday's trading firmly in negative territory. The major averages all moved to the downside after ending the previous session on opposite sides of the unchanged line.

After reaching a record closing high on Tuesday, the Nasdaq slid 43.93 points or 0.5 percent to 8,526.73, while the Dow fell 112.93 points or 0.4 percent to 27,821.09 and the S&P 500 dropped 11.72 points or 0.4 percent to 3,108.46.

Renewed uncertainty about a U.S.-China trade deal weighed on the markets after a report from the Wall Street Journal said trade talks are in danger of hitting an impasse.

Citing former administration officials and others following the talks, the WSJ said the potential impasse threatens to derail the Trump administration's plan for a limited phase one deal this year.

The Journal said both sides remain divided over core issues, including China's demand for removing tariffs and the U.S.'s insistence on China buying farm products.

The report from the WSJ comes after President Donald Trump threatening higher tariffs on Chinese goods if an agreement is not reached.

"If we don't make a deal with China, I'll just raise the tariffs even higher," Trump said during a cabinet meeting at the White House on Tuesday.

Trump said he was happy with the current trade situation, citing the billions of dollars brought in by tariffs, and declared, "China is going to have to make a deal that I like."

Stocks saw some further downside in afternoon trading after a report from Reuters said completion of a phase one U.S.-China trade deal could slide into next year.

Trade experts and people briefed on the talks told Reuters a deal is still elusive and negotiations may be getting more complicated.

Reuters said the delay in signing the deal comes as China presses for more extensive tariff rollbacks, and the Trump administration counters with heightened demands of its own.

However, stocks climbed well off their lows of the session as traders have recently shown a knack for shrugging off negative news on the trade front amid unshakable optimism a deal will eventually get done.

Sector News

Transportation stocks showed a significant move to the downside over the course of the session, dragging the Dow Jones Transportation Average down by 1.4 percent.

Notable weakness also emerged among chemical and semiconductor stocks, with the S&P Chemical Sector Index and the Philadelphia Semiconductor Index sliding by 1.3 percent and 1.2 percent, respectively.

On the other hand, tobacco stocks turned in a strong performance on the day, resulting in a 1.3 percent advance by the NYSE Arca Tobacco Index.

Biotechnology stocks also saw considerable strength, driving the NYSE Arca Biotechnology Index up by 1.1 percent to a four-month closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slid by 0.6 percent, while Hong Kong's Hang Seng Index dropped by 0.8 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 0.8 percent, the German DAX Index fell by 0.5 percent and the French CAC 40 Index dipped by 0.3 percent.

In the bond market, treasuries benefited from the renewed uncertainty about a U.S.-China trade deal. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.8 basis points to 1.738 percent.

Looking Ahead

News on the trade front is likely to remain in focus on Thursday, potentially overshadowing reports on weekly jobless claims, existing home sales and Philadelphia-area manufacturing activity.

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