Stocks finished lower Tuesday as investors digested a series of downbeat geopolitical news. The Dow retreated 313 points, while the S&P 500 lost 1.6%. The Nasdaq Composite was down 1.7%.
The Trump Administration announced the addition of 28 Chinese entities to a blacklist, including several Tech giants. Human rights violations were cited as the catalyst, with the U.S. subsequently implementing visa bans on Chinese officials associated with the alleged abuses. Meanwhile, reports indicated the White House is considering limiting Chinese investments in government pension funds. The raft of headlines coincided with the second day of mid-level trade negotiations between Washington and Beijing, with high-level talks slated for Thursday.
All 11 S&P 500 sectors ended in negative territory, with Financials leading decliners. The Philadelphia Semiconductor Index dropped more than 3%, as U.S.-China tensions pressured Tech shares. In corporate news, Boeing shed 0.6% on worries that heightened European safety concerns could further delay the 737 MAX aircraft’s return to operation.
In central bank news, Federal Reserve Chair Jerome Powell noted that the Fed will soon resume the purchase of short-term government securities. He reiterated that this would not be a return to quantitative easing, but only meant to prevent the money market volatility seen last month. Treasuries strengthened, with the yield on the 10-year note down two basis points to 1.53%. On the data front, the NFIB’s small business optimism index fell to 101.8 last month, the lowest since March. Separately, core producer prices fell 0.3% in September, posting the largest monthly decline in more than four years. In commodities, WTI crude dipped 0.2% to $52.63/barrel.