Stock index futures pointed to a lower start for Wall Street on Tuesday, after President Donald Trump said the idea of holding off on a U.S.-China trade deal until after the 2020 presidential election had appeal, undermining market confidence that a deal may be done before fresh import tariffs are imposed on December 15.
What are major indexes doing?
Futures on the Dow Jones Industrial Average YMZ19, -0.66% were down 114 points, or 0.4%, at 27,675, while S&P 500 futures ESZ19, -0.54% gave up 10.2 points, or 0.3%, to trade at 3,104. Nasdaq-100 futures NQZ19, -0.73% were off 36.25 points, or 0.4%, at 8,279.
Stocks saw their biggest one-day decline in nearly eight weeks on Monday, with the Dow DJIA, -0.96% falling 268.37 points, or 1%, to end at 27,783.04. The S&P 500 SPX, -0.86% dropped 27.11 points or 0.9%, to close at 3,113.87, while the Nasdaq Composite COMP, -1.12% finished at 8,567.99, with a loss of 97.48 points or 1.1%.
What’s driving the market?
Index futures gave up early gains after Trump, speaking at a London news conference where he is attending at NATO meeting, said he had “no deadline” when it comes to concluding the long-running U.S.-China trade talks.
“In some ways, I think it’s better to wait until after the election if you want to know the truth. But I’m not going to say that, I just think that,” Trump said.
While Trump has made similar comments in the past, analysts said stocks remain highly sensitive to headlines and comments on the trade talks, with optimism over the prospect for a so-called phase one deal running high since early October.
On Monday tweeted that he was bringing back tariffs on Brazilian and Argentina steel and the administration also proposed tariffs of up to 100% on $2.4 billion in French imports.
The U.S. is also preparing tariffs on $7.5 billion of European Union imports over illegal subsidies for European aircraft giant Airbus, following a World Trade Organization ruling that gave the U.S. a green light to impose the duties. The WTO ruled the EU hadn’t complied with an order to end the subsidies.
“The run higher seen in major benchmarks in the past few months has been built in no small part on questionable foundations with near incessant positive noises on the U.S.-China trade front seemingly the major catalyst,” said David Cheetham, chief market analyst at XTB Limited, in a note.
Read: Was Trump talk bluster or was he hinting that China talks could collapse?
Major stock indexes rallied to a series of record highs in November, but investors and analysts have warned that markets could be in for a rougher ride if concrete progress isn’t seen ahead of a Dec. 15 deadline for another round of U.S. tariffs on Chinese imports.
“Markets simply aren’t priced for this; for a trade deal to be that far in the future — if one can even be struck at all. After weeks of making generally positive noises on a deal being very close, there is a real sense now that a deal is not so very near at all and markets need to reprice,” said Neil Wilson, chief market analyst for Markets.com, in a note.
Combined with tariff threats on the European Union, Trump’s comments could be taken as a sign the White House has no qualms about levying further tariffs “and is happy using trade as a economic, political and diplomatic weapon,” Wilson said.
U.S. stocks were also pressured Monday following a weaker-than-expected reading on the Institute for Supply Management’s November manufacturing index.
See: Don’t get so excited, this economist says — the trade news isn’t that good
Which stocks are in focus?
Semiconductor stocks were under pressure in premarket trade Monday amid growing uncertainty over U.S.-China trade. Advanced Micro Devices Inc. AMD, -1.07% was down 1.6%, Micron Technology Inc. MU, -2.36% had lost 1.5% and Nvidia Corp. NVDA, -3.46% shed 2%.
Shares of Lands End Inc. LE, -0.08% rallied 10.5% before the start of trade Tuesday after the retailer reported rising profits, gross margin and same-store sales in the third quarter, though revenue fell year-over-year.
PepsiCo Inc. PEP, +0.04% shares were up 0.6% in premarket action after the beverage-and-snacks manufacturer said it planned to buy BFY Brands Inc., maker of PopCorners snacks, for an undisclosed sum.
How are other markets trading?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.80% fell four basis points to 1.796%.
In commodities markets, the price of a barrel of West Texas Intermediate crude oil for January delivery CLF20, -0.50% was unchanged at $55.96, while the price of an ounce of gold for December delivery GCZ19, +0.39% ticked up $6.30, or 0.4%, to $1,468.60.
In Asia overnight, stocks traded mixed, with the China CSI 300 000300, +0.39% gaining 0.4%, Japan’s Nikkei 225 NIK, -0.64% declining 0.6% and Hong Kong’s Hang Seng index HSI, -0.20% edging 0.2% lower.
In Europe, stocks were trading mixed — the Stoxx Europe 600 SXXP, -0.15% was down 0.1%.