(Bloomberg) - Stocks fell as trade talks between the U.S. and China struck another stumbling block, while Treasuries rose and the dollar declined after an American gauge of manufacturing signaled contraction for the first time in three years.
The S&P 500 dropped for the first time in four sessions as Chinese and American officials struggled to agree on a schedule for negotiations after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend, according to a Bloomberg report. Technology shares weighed on benchmarks after Huawei Technologies accused the U.S. government of harassing workers and attacking its internal network. Boeing (NYSE:BA) led losses on the Down Jones Industrial Average.
The 10-year Treasury yield and the dollar dropped after the Institute for Supply Management’s purchasing managers index fell to 49.1 in August, which when below 50 indicates manufacturing contracted for the month. The reading joined a slew of weak numbers produced by factory gauges across the globe, adding to concerns about the world economy and boosting bets on deep rate cuts by the Federal Reserve this year.
“People felt better last week because there was better verbal communication, comments going on out of the United States and abroad. But actions speak louder than words and neither side backed off lifting their tariffs on this prescribed date,” Jim Paulsen, chief investment strategist at the Leuthold Group, said in an interview. “There’s a difference between where we were Friday and where we are now in terms of the tariffs actually going into effect. That and a weak manufacturing number out of China and now a weak manufacturing number in the United States just reinforces that trade is having a negative impact.”
September has begun with a rocky start for risk assets as traders remain sensitive to the twists and turns of the Sino-U.S. trade war, and the first big economic data of the month reminded investors the global economy remains on shaky ground partly as a result. With mistrust on both sides, officials from the world’s two largest economies are struggling to agree on basic terms of re-engagement and even when to hold meetings planned for this month.
Elsewhere, the pound turned higher after U.K. Prime Minister Boris Johnson lost his majority in the House of Commons amid the ongoing Brexit brinkmanship. West Texas-grade crude oil slipped below $54 a barrel amid concerns an economic slowdown from the trade war may dent demand. The eye of Hurricane Dorian has started to move northwest off the U.S. coast, while the storm continues to pound Grand Bahama Island.
