(Reuters) – U.S. stocks edged lower on Tuesday, as a relief rally sparked by optimism over the U.S.-China trade truce stalled after the United States threatened tariffs on additional European goods.
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 5, 2019. REUTERS/Brendan McDermid/File Photo
Washington’s proposed tariffs on $4 billion worth of EU goods in a long-running dispute over aircraft subsidies unnerved investors and came just as trade tensions with China seemed to be easing.
The threat of new EU tariffs adds to the lack of clarity around global trade and will be in the back of investors’ minds, said Eric Wiegand, a senior portfolio manager at U.S. Bank Wealth Management in New York.
Wiegand also said markets could see heightened volatility on Wednesday due to thin trading volumes ahead of the July Fourth holiday.
Adding to the downbeat mood was a clutch of weak manufacturing data from around the world that stoked global growth fears.
The concerns triggered a more than 3% drop in crude prices despite an agreement among oil producers to extend supply cuts and pushed the energy sector .SPNY down nearly 2%, the biggest drag on markets.
The S&P 500 index .SPX hit a record high on Monday after Washington and Beijing agreed over the weekend to resume trade talks that broke down in May.
The collapse triggered the worst monthly performance this year, but markets have since recouped most of their losses on hopes that the Federal Reserve would be more accommodative in the face of signs of slowing global economy.
Market participants still expect the Fed to cut interest rates at its July 30-31 policy meeting, despite the latest developments in trade talks.
The Dow Jones Industrial Average .DJI fell 61.46 points, or 0.23%, to 26,655.97 and the S&P 500 .SPX lost 6.71 points, or 0.23%, to 2,957.62.
The Nasdaq Composite .IXIC dropped 27.09 points, or 0.33%, to 8,064.08.
Automatic Data Processing (ADP.O) slipped 4%, pressuring the tech-heavy Nasdaq, after market sources said brokerage Jefferies is re-offering 8 million of the company’s shares at a discount.
L3Harris Technologies (LHX.N) gained 3.33%, the most on the S&P 500, after Jefferies added the defense contractor to its top picks for aerospace and defense electronics for the second half of 2019.
Oil majors Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) declined more than 1% each.
Gilead Sciences Inc (GILD.O) rose 1% after the drugmaker said it will submit a new drug application for its arthritis drug to the FDA this year.
Investors are now awaiting the monthly jobs report on Friday, which is expected to show that the private sector added 160,000 jobs in June, after May’s sharp slowdown in jobs growth.
Declining issues outnumbered advancers for a 1.13-to-1 ratio on the NYSE and for a 1.70-to-1 ratio on the Nasdaq.
The S&P index recorded 31 new 52-week highs and one new low, while the Nasdaq recorded 50 new highs and 37 new lows.
Reporting by Shreyashi Sanyal & Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila