The Dow and broader U.S. stock market opened lower on Monday after Chinese media poured cold water on the likelihood of a comprehensive trade agreement between Washington and Beijing.
Dow Tumbles After the Open; S&P 500, Nasdaq Follow
All of Wall Street’s major indexes tumbled after the open, mirroring a downbeat pre-market session for Dow futures.
The Dow Jones Industrial Average slipped 47.54 points, or 0.2%, to 26,769.05.
The broad S&P 500 Index of large-cap stocks fell 0.2% to 2,965.20. The technology-focused Nasdaq Composite Index declined 0.2% to 8,041.03.
Comprehensive U.S.-China Trade Deal Far From Guaranteed
The prospect of a comprehensive ‘phase two’ trade agreement between the United States and China appears dimmer than initially perceived after Chinese state media expressed caution about forthcoming talks.
China Daily on Sunday said the U.S. should “avoid backpedaling, as it has in the past, and instead cherish what has been achieved as a manifestation of a healthy and steady U.S.-China relationship…”
The article, which was titled “Let’s nail down ‘phase one’ before moving to the next,” added:
“While the negotiations do appear to have produced a fundamental understanding on the key issues and the broader benefits of friendly relations, the Champagne should probably be kept on ice, at least until the two presidents put pen to paper.”
A separate article from the People’s Daily warned on Saturday that there are no winners in a trade war and that both countries “must not fall into a lose-lose trap.”
The views seem to contradict earlier comments from President Trump, who said “phase two will start almost immediately” after the initial agreement was finalized on Friday. As part of phase one, China agreed to purchase up to $50 billion worth of U.S. agricultural products in exchange for Washington freezing tariffs on Chinese imports.
Several outstanding issues continue to block a more comprehensive agreement, including Chinese industrial policy, government subsidies and intellectual property laws.
Last modified: September 23, 2020 1:10 PM