Stocks Fall Over Trade Tensions, Weak Economic Reports

Technology companies led stocks broadly lower, getting the market off to a weak start for the month after a strong November and more in Monday’s Stock Market Update.

Adobe (NASDAQ: ADBE) fell 2.2% Monday and Applied Materials (NASDAQ: AMAT) gave up 2%.

Traders were focusing on more tensions between the U.S. and China and weak reports from the U.S. on manufacturing and construction spending.

Homebuilders fell broadly after a government report showed that spending on construction projects declined unexpectedly in October. Hovnanian Enterprises (NYSE: HOV) slumped 6.9%.

Energy companies held up well as oil prices jumped. Marathon Oil (NYSE: MRO) rose 2.6%.

The stumbling start to December is a departure from the market’s strong performance last month. The S&P 500 closed out November with its best monthly gain since June. Last week also marked the benchmark index’s seventh weekly gain in eight weeks. In that time span, the S&P 500, Dow Jones Industrial Average and Nasdaq each set multiple record closing highs.

Investor optimism that Washington and Beijing were closing on a trade deal helped spur the market’s milestone-setting run this fall, lifting it from a summer slide brought on by recession fears and uncertainty over trade.

The negotiations to end the longstanding trade war between the U.S. and China could face a tougher path this month following a flareup over Hong Kong. China said Monday it will suspend U.S. military ship and aircraft visits to the semi-autonomous territory and sanction several American pro-democracy groups in retaliation for the signing into law of legislation supporting anti-government protests.

President Trump has expressed concern that the legislation could affect negotiations. Wall Street is hoping that the nations can make progress toward at least stalling new tariffs scheduled for Dec. 15 on $160 billion worth of Chinese products, including smartphones and laptops.

STOCK MARKET UPDATE

KEEPING SCORE: The S&P 500 fell 27 points, or 0.9% to 3,113. The Dow Jones Industrial Average lost 268 points, or 1%, to 27,783. The Nasdaq fell 97 points, or 1.1%, to 8,567.

European markets closed broadly lower.

FORGING GAINS: United States Steel (NYSE: X) rose 4.2% and AK Steel (NYSE: AKS) climbed 4.5% after President Donald Trump said the U.S. would impose tariffs on steel and aluminum imports from Argentina and Brazil. Both South American nations were among a group of U.S. allies that Trump had exempted from steel and aluminum tariffs last year.

ECONOMIC WATCH: Wall Street faces a busy week of reports that could provide a clearer picture of the economy’s health.

U.S. manufacturing shrank more than expected in November, according to figures released by the Institute for Supply Management on Monday. Manufacturing has been a weak spot in the broader economy. A separate report on the services sector, which makes up the bulk of the economy, is expected on Wednesday.

Also on Monday, the Commerce Department reported an unexpected drop in construction spending during October.

Investors will get a glimpse into the health of the jobs market on Wednesday when payroll processor ADP releases its survey for November. The Labor Department will release its closely watched employment data on Friday. Solid job growth, along with consumer spending, have been among the key factors pushing economic growth.