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Wall Street dips as caution sets in ahead of trade talks

Kitco News

(Reuters) - Wall Street’s main indexes fell on Monday as investors refrained from making big bets ahead of the trade talks later in the week, following a roller-coaster start to the month on fears that the U.S. economy could be sliding into a recession.

Tariff concessions from the United States and China last month had fueled hopes of a resolution to the prolonged dispute, but a report that Beijing was increasingly reluctant to agree to a broad trade deal pursued by President Donald Trump weighed on sentiment.

The trade-sensitive technology sector .SPLRCT dropped 0.2%, dragged down by heavyweights Microsoft Corp (MSFT.O) and Apple Inc (AAPL.O). Technology has been the best performer among the major S&P 500 sectors so far this year.

“Right now, investors are more focused on an actual outcome from these talks, but a majority have become somewhat skeptical that there will be something concrete this week,” said Rick Meckler, partner at Cherry Lane Investments, New Vernon, New Jersey.

The high-level negotiations are set to begin on Thursday.

Wall Street logged a choppy start to October as concerns fueled by a contraction in U.S. factory activity and weaker-than-expected services sector data were countered by rising bets of a third interest rate cut this year by the Federal Reserve.

Traders see a 74% chance of a rate cut at the central bank’s policy meeting later this month, up from about 40% a week ago, according to CME Group’s FedWatch tool.

Investors will now turn to the third-quarter earnings season, which kicks off next week with U.S. banks reporting, for more clarity on the impact of the trade war on Corporate America.

Analysts expect the lowest quarterly profit performance since 2016, with S&P 500 earnings seen falling nearly 3% from a year earlier, based on IBES data from Refinitiv.

At 9:53 a.m. ET, the Dow Jones Industrial Average .DJI was down 98.06 points, or 0.37%, at 26,475.66, while the S&P 500 .SPX was down 11.04 points, or 0.37%, at 2,940.97. The Nasdaq Composite .IXIC was down 23.59 points, or 0.30%, at 7,958.88.

Among stocks, E*Trade Financial Corp (ETFC.O) rose 2.6% after UBS raised its rating on the online broker’s shares to “buy”.

Nvidia Corp (NVDA.O) gained 3.1% after RBC Capital Markets raised its price target on the chipmaker on improving gaming and data center demand. The stock was the biggest gainer on the S&P 500.

General Motors Co (GM.N) dropped 1%, after the UAW rejected the carmaker’s latest offer of a four-year labor contract.

Declining issues outnumbered advancers for a 2.53-to-1 ratio on the NYSE and for a 1.98-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and one new low, while the Nasdaq recorded nine new highs and 36 new lows.

Reporting by Shreyashi Sanyal in Bengaluru; Editing by Bernard Orr and Sriraj Kalluvila

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