Stocks close near intraday lows as investors seek fresh market catalysts

Stocks close near intraday lows as investors seek fresh market catalysts

Trump says tariffs could go up ‘substantially’

U.S. stocks closed near intraday lows Tuesday after major benchmarks surrendered earlier gains as investors sought new catalysts after a long holiday weekend while monitoring U.S.-China trade tensions.

How did major benchmarks fare?

The Dow Jones Industrial Average DJIA, -0.93%  shed 237.92 points, or 0.9%, to 25,347.77, while the S&P 500 index SPX, -0.84%  fell 23.67 points, or 0.8%, to 2,802.39. The Nasdaq Composite Index COMP, -0.39%  dropped 29.66 points, or 0.4%, to 7,607.35.

U.S. financial markets were closed Monday for Memorial Day. Stocks ended higher Friday but booked losses for the week, extending the Dow’s weekly losing streak to five, its longest since June 2011. The Dow saw a 0.7% weekly fall, while the S&P 500 logged a 1.2% retreat and the Nasdaq Composite gave up 2.3%.

What drove the market?

The major indexes remain solidly higher for the year to date but have retreated significantly in May as U.S.-China trade tensions have heated up. Washington and Beijing have engaged in a round of tit-for-tat tariff escalations, while the Trump administration has moved to blacklist U.S. exports to Chinese telecom-equipment firm Huawei Technologies Co., prompting threats of further retaliation by China.

President Donald Trump, speaking at a joint news conference Monday in Tokyo with Japanese Prime Minister Shinzo Abe, said the U.S. wasn’t ready to make a trade deal with China.

“They (China) would like to make a deal. We’re not ready to make a deal,” Trump said, according to Bloomberg. He added that tariffs on Chinese products could go up “very substantially.”

Home prices rose in March by 0.1% compared with February and 2.7% compared with last year, according to the S&P CoreLogic Case-Shiller 20-city index. That is the slowest annual pace of growth since August 2012.

Consumer confidence improved in May, according to the Conference Board’s index, which rose to 134.1 from 129.2 in April, above economists expectations of a 132.0 reading, per a MarketWatch poll.

A potential merger deal was also in focus after Fiat Chrysler Automobiles NVFCAU, +7.24%  unveiled a proposal that would combine the company with French rival Renault SA RNO, +0.84% , creating the world’s third-largest auto maker by production. U.S.-traded shares of Fiat rallied more than 7%.

Worries about Italy were back on the radar for European investors after the country’s euroskeptic party fared well in European Parliament elections over the weekend. Italian bank stocks fell, contributing to a weaker tone across European markets.

What were analysts saying?

“We’ve been with a short-term negative trading bias since ‘The Tweet’ of a few Sundays ago, and that kick in the pants has yet to produce anything for bulls to again celebrate,” said Rick Bensignor of Bensignor Investment Strategies, in a note, referring to Trump’s May 5 tweet consummating threats to raise tariffs on $200 billion of Chinese goods to 25%.

Since then, the S&P 500 “has been rangebound, and hasn’t been able to progress back above 2,890 nor break to new lows beneath 2,801,” Bensignor said.

Which stocks were in focus?

Global Payments Inc. GPN, -2.98% and Total Systems Services Inc. TSS, +4.75%announced an all-stock merger of equals, valued at $21.5 billion. Shares of Global Payments declined 3%, while Total Systems shares jumped 4.8%.

Shares of Alibaba Group Holding Ltd. BABA, -0.12% fell 0.1% after reports Monday that the Chinese e-commerce giant is planning to raise as much as $20 billion through a listing of public shares in Hong Kong.

Shares of FedEx Corp. FDX, -0.93% dropped 0.9% after Reuters reported that Huawei was reviewing its relationship with the company after it claimed that the logistics giant rerouted packages destined for Huawei addresses in Asia to the U.S.

How did other markets trade?

Stocks in Asia closed mostly higher, with Japan’s Nikkei 225 NIK, -1.20% rising 0.4%, Hong Kong’s Hang Seng Index HSI, -0.40% adding 0.5% and China’s Shanghai Composite Index SHCOMP, -0.11% advancing 0.4%. In EuropeSXXP, -0.22% , stocks fell 0.2%.

In commodities markets, the price of crude oil CLN19, -1.08% rose while goldGCN19, +0.26% settled lower and the U.S. dollar DXY, -0.03% ticked higher relative to its peers.

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