Stocks Claw Back Some Early Losses as Huawei Arrest Renews Trade Tensions
Stocks clawed back much of the ground they lost in an early plunge triggered by the arrest of a senior Chinese technology executive, and more in Thursday’s Stock Market Update.
The Dow Jones Industrial Average and the S&P 500 index ended slightly lower Thursday, having taken a nosedive in the morning.
Technology shares including Netflix moved higher.
Investors were encouraged by a report that the Federal Reserve may move slower in raising rates.
Bond yields remained lower as investors moved money into lower-risk investments.
Boeing, which would have much to lose in an extended trade battle, lost 3.1 percent.
STOCK MARKET UPDATE
The Dow lost 79 points, or 0.3 percent, to 24,947. It was down 784 earlier.
The S&P 500 lost 4 points, or 0.2 percent, to 2,695. The Nasdaq rose 29 points, or 0.4 percent, to 7,188.
The Russell 2000 index of small-company stocks gave up 19 points, or 1.3 percent, to 1,461.
The latest losses put the S&P 500 and the Dow back into the red for the year. The Nasdaq was still slightly higher for 2018.
Major indexes overseas also fell sharply. The DAX in Germany dropped 3.5 percent, while France’s CAC 40 lost 3.3 percent. The FTSE 100 in Britain declined 3.1 percent, its biggest drop since the country held a vote to leave the European Union in June 2016.
Canadian authorities arrested the chief financial officer of China’s Huawei Technologies on Wednesday for possible extradition to the U.S. The Globe and Mail newspaper, citing law enforcement sources, said Meng is suspected of trying to evade U.S. trade curbs on Iran.
Meng is a prominent member of Chinese society as deputy chairman of the board and the daughter of company founder Ren Zhengfei. China has demanded Meng’s immediate release.
The arrest came less than a week after President Donald Trump met with Chinese President Xi Jinping at the G-20 summit in Argentina.
Markets rallied on Monday on news that Trump and Xi agreed to a temporary, 90-day stand-down in their trade dispute. That optimism quickly faded as skepticism grew that Beijing will yield to U.S. demands anytime soon, leading to a steep sell-off in global markets on Tuesday.
On Thursday, China’s government said it would promptly carry out the tariff cease-fire with Washington. It also expressed confidence that the two nations can reach a trade agreement. The remarks suggest Beijing wants to avoid disruptions from Meng’s arrest.
Even so, investors remained skeptical.
“Trade tensions aren’t going away,” Schaffer said. “Contradictory statements from the administration have given some people a little bit of pause with respect to the optimism that people felt following the Argentina G-20 conference.”
The renewed jitters over the implications that Meng’s arrest could have on U.S.-China trade negotiations weighed on big exporters Thursday. Boeing gave up 3.5 percent to $330.45.
The news also resulted in another down day for markets in Asia.
Hong Kong’s Hang Seng index tumbled 2.5 percent and Japan’s benchmark Nikkei 225 fell 1.9 percent. Australia’s S&P/ASX 200 lost 0.2 percent, while South Korea’s Kospi sank 1.6 percent. Shares also fell in Taiwan and all other regional markets.
OPEC countries gathered in Vienna Thursday to find a way to support the falling price of oil. Analysts predicted the cartel and some key allies, like Russia, would agree to cut production by at least 1 million barrels per day. OPEC heavyweight Saudi Arabia indicated it was in favor of such a cut.
The expectation did not keep the price of oil from falling, however, as investors focused on the potential economic disruption from any escalation in the U.S.-China trade dispute.
Benchmark U.S. crude dropped 2.6 percent to settle at $51.49 a barrel in New York. Brent crude, used to price international oils, slid 2.4 percent to close at $60.06 per barrel.
The dollar weakened to 112.57 yen from 113.19 yen late Wednesday. The euro rose to $1.1376 from $1.1342.
Gold gained 0.1 percent to $1,243.60 an ounce. Silver fell 0.5 percent to $14.51 an ounce. Copper dropped 1.1 percent to $2.74 a pound.
In other commodities trading, wholesale gasoline lost 0.8 percent to $1.43 a gallon. Heating oil gave up 1.6 percent to $1.86 a gallon. Natural gas slid 3.2 percent to $4.33 per 1,000 cubic feet.
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