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S&P 500 Closes Lower as Trade Concerns Curb Gains

August 23, 2018

The S&P 500 closed just below breakeven Thursday, as a fresh volley of trade tariffs and concerns about legal issues for President Donald Trump kept gains in check.

The Dow Jones Industrial Average fell about 0.30%. The S&P 500 fell 0.17%, while the Nasdaq Composite fell about 0.13%.

 

The China and U.S. tariffs on each other's goods, that went into effect on Thursday, underlined the ongoing trade spat between the two nations, ushering in a cautious day of trade.

The United States imposed 25% tariffs on an additional $16 billion of Chinese goods just after midnight ET Thursday, prompting China to respond with in-kind measures against U.S. goods.

Boeing (NYSE:BA) and Caterpillar (NYSE:CAT) -- both of which have significant internationally exposure, making them vulnerable to rising trade tensions -- succumbed to trade-war fears, closing lower for the day.

 

The return to investor focus of the escalating U.S.-Sino trade spat comes even as both nations resumed mid-level trade talks for the second-straight day, although many anticipate little, if any, progress.

 

Sentiment on U.S. was also soured by worries over legal issues concerning Trump. The president's former lawyer, Michael Cowen, implicated him in crimes on Tuesday, saying he had violated the law at the behest of Trump.

 

Trump has denied any wrongdoing, and warned that market would "crash," should measures be taken to impeach him.

 

Beyond the political and trade-war drama, investor attention was also swayed by ongoing corporate earnings.

 

Alibaba (NYSE:BABA) stock closed 3% lower after its 61% jump in revenue year on year fell short of estimates. L Brands (NYSE:LB) stock slumped 11% after it cut its full-year profit guidance.

Falling energy stocks exacerbated the move lower in the broader market after oil prices pared gains to settle lower on trade concerns.

 

On the New York Mercantile Exchange crude futures for October delivery fell 3 cents settle at $67.83 a barrel.

 

Further evidence that growth in the housing market may be cooling gave market participants further reason to hold off on U.S. stocks. Sales of new homes in the U.S. unexpectedly fell in July to a 9-month low.

 

The Commerce Department said Thursday new home sales fell 1.7% to a seasonally adjusted annual rate of 627,000 units last month, the lowest level since October 2017. That missed economists’ forecasts.

 

On the corporate news front, Advanced Micro Devices (NASDAQ:AMD) stock surged 6.7%, after analysts at Rosenblatt Securities raised their price target on the stock to $30 from $27, citing the company's manufacturing edge over Intel

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