Major U.S. Stock Indexes Weaken on Renewed Trade Worries

The major U.S. equity indexes finished lower on Thursday on renewed concerns over the trade dispute between the United States and China. Going into this week-end’s summit, traders are less-hopeful that a trade deal will be struck between the two economic powerhouses. Earlier in the week, the stock market was supported by optimism the U.S. President Trump and China President Xi Jinping would reach a trade agreement at the G20 summit in Argentina on November 30 to December 1.

In the cash market, the benchmark S&P 500 Index settled at 2737.76, down 6.03 or -0.22%. The blue chip Dow Jones Industrial Average closed at 25338.84, down 27.59 or -0.11% and the tech-based NASDAQ Composite finished at 7273.74, down 17.85 or -0.24%.

Stocks Weaken After Navarro Announced as Dinner Guest

After posting modest gains early in the session, all three major indexes turned lower after the South China Morning Post reported White House advisor Peter Navarro would be attending the dinner between President Donald Trump and Chinese leader Xi Jinping in Buenos Aires at the G20 summit. CNBC later confirmed the news.

Stocks hit their lows of the day as the news of Navarro’s attendance hit the market. The selling was fueled by dampened hopes that a trade deal could be reached at the dinner given his longstanding hawkish tone on U.S.-China trade relations.

Earlier in the month, stocks plunged after Navarro said any deal between the U.S. and China would be on Trump’s terms, not Wall Street’s. This comments were later disavowed by Trump’s chief trade advisor and direction of the National Economic Council, Larry Kudlow.

U.S. Treasury Markets

U.S. Treasury yields continued to feel pressure on Thursday following the dovish remarks from Federal Reserve Chairman Jerome Powell on Wednesday. If you recall, Powell said he believes interest rates are close to neutral. This was a marked change from comments Powell made nearly two months ago.

“Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy – that is, neither speeding up nor slowing down growth,” Powell told the Economic Club of New York.

The yield on the 10-year U.S. Treasury note fell below 3.00 percent, touching 2.997 percent before settling near 3.043 percent. The yield on the 30-year Treasury bond rose to 3.339 percent and the 2-year inched higher to 2.813 percent.

In other news, the minutes from the Nov. 7-8 meeting of the Federal Open Market Committee, pointed toward the strong likelihood of another quarter-point hike in the central bank’s benchmark interest rate. However, the minutes also noted some concern about the “timing” of rate hikes.