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U.S. Stocks Move Lower On Report Trump-Xi Meeting Could Be Delayed

wallstreet july23 06nov19 lt

After showing a lack of direction earlier in the session, stocks have come under pressure over the course of the trading day on Wednesday. The major averages have all slid into negative territory, although selling pressure has remained somewhat subdued.

Currently, the major averages are posting modest losses. The Dow is down 47.36 points or 0.2 percent at 27,445.27, the Nasdaq is down 44.12 points or 0.5 percent at 8,390.56 and the S&P 500 is down 4.90 points or 0.2 percent at 3,069.72.

The weakness that emerged on Wall Street reflects the markets' high sensitivity to developments on the trade front, with the pullback coming after a report from Reuters said a meeting between President Donald Trump and Chinese President Xi Jinping could be delayed until December.

A senior Trump administration official told Reuters discussions continue over terms of phase one of the trade deal and a venue for a meeting between Trump and Xi.

Sites in Europe and Asia have been suggested for the meeting, with Sweden and Switzerland among the possibilities, while Trump's suggestion of Iowa appears to have been ruled out, the official said.

The official said China's latest push for more tariff rollbacks was not expected to derail progress toward an interim deal but noted that it was still possible an agreement would not be reached.

The choppy trading seen earlier in the day came as traders seemed reluctant to make significant moves amid some uncertainty about the near-term outlook for the markets after the recent run to record highs.

Optimism about a potential U.S.-China trade deal contributed to the strength on Wall Street, but traders now seem to be looking for more concrete developments.

On the U.S. economic front, preliminary data released by the Labor Department showed labor productivity in the U.S. unexpectedly edged lower in the third quarter.

The report said labor productivity dipped by 0.3 percent in the third quarter after spiking by an upwardly revised 2.5 percent in the second quarter.

The drop came as a surprise to economists, who had expected productivity to climb by 0.9 percent compared to the 2.3 percent jump originally reported for the previous month.

Meanwhile, the Labor Department said unit labor costs soared by 3.6 percent in the third quarter after surging up by a downwardly revised 2.4 percent in the second quarter.

Economists had expected unit labor costs to jump by 2.2 percent compared to the 2.6 percent spike originally reported for the previous month.

Sector News

Energy stocks have moved sharply lower over the course of the trading session, with a pullback by the price of crude oil weighing on the sector.

After reaching a high of $57.85 a barrel, crude for December delivery has slid $0.84 to $56.39 a barrel following the release of a report showing a much bigger than expected weekly jump in crude oil inventories.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service index is down by 2.8 percent, the NYSE Arca Oil Index is down by 2.4 percent and the NYSE Arca Natural Gas Index is down by 2 percent.

Telecom, semiconductor and steel stocks are also seeing considerable weakness, while gold stocks have shown a strong move to the upside along with the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.2 percent, while China's Shanghai Composite Index fell by 0.4 percent.

Meanwhile, the major European markets all moved modestly higher on the day. While the French CAC 40 Index rose by 0.3 percent, the German DAX Index and the U.K.'s FTSE 100 Index inched up by 0.2 percent and 0.1 percent, respectively.

In the bond market, treasuries are regaining ground after moving sharply lower over the three previous sessions. Subsequently the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.9 basis points at 1.827 percent.

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