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U.S. Stocks Fall on Fresh Trade Tensions

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12/02/2019 | 10:22am EST

By Anna Isaac

U.S. stocks fell Monday, weighed down by declines in shares of technology companies.

The Dow Jones Industrial Average declined 57 points, or 0.2%, shortly after the opening bell. The S&P 500 fell 0.5%, and the Nasdaq Composite edged down 0.8%.

Monday's moves were a step back for stocks after they closed out their best month since June. The market has climbed to fresh highs in recent weeks, buoyed by data showing the U.S. service sector on solid footing.

Evidence that household spending looks buoyant heading into the holiday season has helped reassure investors, even as they have had to grapple with lingering uncertainty over trade policy and signs of weakening in the industrial sector.

U.S. stock futures pared gains early Monday after President Trump said on Twitter that he would restore tariffs on steel and aluminum imports from Brazil and Argentina. He also accused the two countries of devaluing their currencies.

Stock declines then accelerated after a gauge of U.S. factory activity came in weaker than economists had expected.

"We've seen world trade slowing down. The last thing we need is more tariffs to slow it down further," said Lucy Macdonald, chief investment officer for global equities at Allianz Global Investors. "This has been a major source of concern for investors all year: trade, primarily the U.S. and China, but also the U.S. and everywhere else."

Technology shares lagged behind the broader market Monday, with losses hitting everything from payment processors to semiconductor companies.

Nvidia slipped 1.6%, while Lam Research fell 1%.

Changes in analysts' ratings also drove swings among individual stocks.

Streaming media platform Roku fell 14% after Morgan Stanley lowered its rating for the company to "underperform" from "equal weight," warning investors that revenue and profit growth would likely slow significantly in 2020.

The pan-continental Stoxx Europe 600 index swung lower after the president's tweet, recently trading down 0.8%.

The gauge had earlier gained as much as 0.7% after China's economy showed signs of stabilizing and a key European survey signaled better-than-expected manufacturing conditions.

Two separate surveys of manufacturers in China pointed to improving confidence and demand last month. Factory activity in the euro area also gave cause for cautious optimism, with the rate of contraction easing more than markets had expected for the 19-nation region.

While economists said it was too early to say that China, the world's second-largest economy, had recovered, markets earlier in the day had cheered the fact that another major risk to the global economy seemed to be diminishing.

Separately, People's Bank of China Gov. Yi Gang said the central bank wouldn't resort to "competitive" quantitative easing, even if interest rates in other major economies approached zero. Growth remained within a reasonable range, and inflation was relatively mild overall, Mr. Yi wrote in the Communist Party's main political journal, Qiushi. The Shanghai Composite Index ended the day largely flat.

Meanwhile, U.S. crude oil jumped 2.2% to $56.35 a barrel after Persian Gulf officials said Saudi Arabia would push for an extension to oil-production cuts through mid-2020 at an Organization of the Petroleum Exporting Countries summit this week. The kingdom is targeting prices of at least $60 a barrel, according to a Saudi oil adviser.

Later in the week, investors will get a look at a gauge of activity in the U.S. service sector, as well as the Labor Department's November employment report.

Economists surveyed by The Wall Street Journal expect to see a small pickup in wage growth and solid job creation, which would show investors that the labor market remains strong heading into the end of the year.

Akane Otani contributed to this article

Write to Anna Isaac at anna.isaac@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
ALLIANZ SE -2.58% 215.25 Delayed Quote.1.17%
BANK OF CHINA LIMITED 0.00% 3.2 End-of-day quote.-4.19%
CHINA-SHANGHAI COMP -2.75% 2976.53 End-of-day quote.-2.93%
DJ INDUSTRIAL -1.39% 28589.02 Delayed Quote.1.58%
EURO / ARGENTINE PESO (EUR/ARS) 0.20% 66.264 Delayed Quote.-1.43%
EURO / BRAZILIAN REAL (EUR/BRL) 1.11% 4.6558 Delayed Quote.2.36%
LAM RESEARCH CORPORATION -3.85% 294.76 Delayed Quote.4.84%
LME ALUMINIUM CASH -0.34% 1775.5 End-of-day quote.0.20%
LONDON BRENT OIL -0.39% 58.78 Delayed Quote.-6.00%
MORGAN STANLEY -2.68% 53.105 Delayed Quote.6.71%
NASDAQ 100 -1.92% 8968.813918 Delayed Quote.5.54%
NASDAQ COMP. -1.74% 9154.848163 Delayed Quote.4.58%
NVIDIA CORPORATION -4.52% 239.535 Delayed Quote.6.45%
S&P 500 -1.39% 3250.21 Delayed Quote.2.00%
S&P/CITIC 300 INDEX -3.13% 3485.68 Delayed Quote.-1.86%
S&P/CITIC 50 INDEX -2.99% 3600.44 Delayed Quote.-3.65%
STOXX EUROPE 600 -2.26% 414.07 Delayed Quote.1.01%
STOXX EUROPE 600 NR -2.26% 894.14 Delayed Quote.1.06%
US DOLLAR / ARGENTINE PESO (USD/ARS) 0.25% 60.129 Delayed Quote.0.23%
WTI -0.04% 52.56 Delayed Quote.-9.29%
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