The Dow Jones Industrial Average dropped 220.77 points to 25,169.53 as Apple and DowDuPont led the decline. The S&p 500 pulled back 0.94% to close at 2,706.05, lew lower by the energy and tech sectors. The Nasdaq Composite lagged, sliding about 1.2$ to 7,288.35.
CNBC learned through a source that a meeting between the two leaders was “highly unlikely.” China and US both have until the start of March to strike a trade deal. Otherwise, additional tariffs on Chinese goods will take effect. The source said that a meeting between Xi and Trump could happen shortly after the deadline passes, but noted that both sides have too much work ahead of them. Later, Trump confirmed that he would not be meeting Xi before the deadline.
Earlier, White House economic advisor Larry Kudlow stated that China and US were still far away on striking a trade deal.”We’ve got a pretty sizable distance to go here,” Kudlow told Fox Business, referring to the ongoing trade talks between the two largest world economies. Kudlow added that Trump is “optimistic with respect to a potential trade deal.”
“The keystone in the wall of worry is the trade discord,” stated Sam Stovall, chief investment strategist at CFRA Research.
“Should the negotiations crumble so too will near term support for equity prices.” He added.
Shares of Caterpillar and Deere both fell more than 1%. Boeing dropped 0.9 percent. These companies’ stocks are seen as bellwethers for global trade given their exposure to overseas markets.
The market was already on edge as worries about the global economy were rekindled. The European Commission slashed its growth outlook for the euro zone this year as it expects the bloc’s largest economies to be held back by global trade tensions, among other issues.
The Commission said euro zone growth will slow to 1.3% this year from 1.9% in 2018, before rebounding in 2020 to 1.6%.
That growth outlook sparked worries that the global economy could be slowing down, in part because of trade tensions. Similar fears contributed to the market’s sharp downturn in December. That decline briefly sent the S&P 500 into bear-market territory on an intraday basis.
The Bank of England also cut its 2019 outlook and sees the UK economy growing at its slowest pace since 2009.
Thursday’s decline comes as the corporate earnings season continues. Twitter reported quarterly earnings that beat analyst expectations on Thursday. However, shares of the social media company fell 9.8% as Twitter also issued light guidance.
Fiat, Chrysler and Cardinal Health remained the companies that reported better-than-expected earnings.