Stocks

The Dow Fell 113 Points Because China Trade Talks Hit a Hong Kong Roadblock

All three major U.S. stock indexes fell on Wednesday as China threatened to retaliate with “strong countermeasures” if Congress proceeds with passage of a bill supporting Hong Kong protestors.

All three major U.S. stock indexes fell on Wednesday as China threatened to retaliate with “strong countermeasures” if Congress proceeds with passage of a bill supporting Hong Kong protestors.

Retreat of the Deal. All three major U.S. stock indexes fell on Wednesday as Hong Kong has suddenly become a much bigger sticking point between the U.S. and China. Following the sharp setback on retail stocks Tuesday, the sector is embracing some better news from Target (ticker: TGT) and Lowe’s (LOW), as both reported better-than-expected earnings and raised the outlook for the year. In today’s After the Bell, we...

Month of Stability

Stocks declined on Wednesday as hopes for a partial trade deal by the end of this year waned. The Dow Jones Industrial Average has fallen 112.93 points, or 0.40%, to close at 27,821.09. The S&P 500 is down 11.72 points, or 0.38%, to finish at 3108.46, and the Nasdaq Composite dropped 43.93 points, or 0.51%, to close at 8526.73.

The market has been relatively steady over the past month, and the Cboe Volatility Index has remained below 15 since late October. The S&P 500 hasn’t lost 0.5% in a day in 31 trading days—the longest such stretch since the 50 trading days ended Nov. 14, 2017.

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The U.S. Senate unanimously passed a bill on Tuesday in support of Hong Kong protesters. The legislation would require the Secretary of State to certify at least once a year that Hong Kong still retains sufficient autonomy to receive special U.S. trading consideration. Under the bill, the president is also required to sanction individuals involved with human-rights suppression in Hong Kong. The bill is expected to get a vote from the House on Wednesday and then approved by President Donald Trump. China threatened to retaliate with “strong countermeasures” if Congress proceeds with passage of the bill.

Hopes for a trade deal between the U.S. and China by the end of this year may be fading. The Hong Kong bill isn’t the only thorn between the two countries, China wants more extensive tariff rollbacks, while the U.S. wants more specific commitment from Beijing on farm product purchases. Still, the Trump administration has been upbeat about the high-level talks between the two countries’ negotiators over the weekend and called the conversation “constructive.”

The Federal Reserve released the minutes for October’s policy meeting of the Federal Open Market Committee, when the central bank cut the target interest rate by 25 basis points for the third time this year.

The minutes indicate that there is a growing divide within the Fed about the need for additional cuts. While two members voted outright against the October reduction, others who voted in favor acknowledged that their decision was not without reservation.

“Given the disagreement on that point within the FOMC, further deterioration in economic or financial conditions would be needed,” wrote Jim Baird of Plante Moran Financial Advisors on Wednesday. “With recent indications of stabilization in manufacturing, improvement in the service sector, and solid job gains, the clearest path forward for the Fed would appear to be standing pat.”

Write to Evie Liu at evie.liu@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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