U.S. Stocks Close Lower as Treasuries Rise: Markets Wrap

(Bloomberg) -- Stocks finished lower after a seesaw session as investors digested the most recent twists in the tumultuous trade talks between the U.S. and China. Treasuries rose, while the dollar was little changed.

The S&P 500 fell Tuesday after Chinese officials questioned statements by President Donald Trump about trade discussions between the two countries. Banks led losers as the 10-year Treasury yield fell below 1.50%. Philip Morris International Inc. slid after confirming it was in merger talks with Altria Group Inc.

The greenback was steady against major currencies. The euro fell following data showing Germany was on the brink of a recession, while the pound gained as opposition politicians stepped up efforts to prevent a no-deal Brexit. West Texas crude rose to almost $55 a barrel.

Trump’s apparent de-escalation of trade tensions at the G-7 meetings had helped ease investor nerves before Beijing questioned some of those comments. Adding to the uncertainty, Germany offered up fresh evidence that protectionism is weighing on global growth. Volatility remains relatively high as traders reflect on previous periods of calm in the trade war that were quickly ended by surprises.

“From Friday to now has been just head-spinning on the trade issue,” said David Donabedian, chief investment officer of CIBC Private Wealth Management. “Mid-year, we basically said the trade war needs to get worse before it gets better and there will be a lot of saber-rattling. I think we’re still in the midst of that. I don’t think the president’s recent comments marked the beginning of a solid or consistent trajectory to a resolution here.”

Elsewhere, Hong Kong Chief Executive Carrie Lam said her government can handle unrest without assistance from Chinese forces, and still wants to hold talks with protesters despite a flare-up in violence.

Events to keep an eye on this week:

• The second reading of Q2 U.S. GDP Thursday is expected to refine estimates of slightly lower economic growth.
• Bank of Korea policy decision and briefing is on Friday.
• Euro-zone CPI data for August is also due Friday.

Here are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.3% as of 4:01 p.m. New York time.
• The Stoxx Europe 600 Index increased 0.6%.
• The MSCI Asia Pacific Index advanced 0.6%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro fell 0.1% at $1.109.
• The British pound gained 0.6% to $1.2288, the strongest in over a month.
• The Japanese yen increased 0.4% to 105.74 per dollar.

Bonds

• The yield on 10-year Treasuries declined six basis points to 1.47%, a three-year low.
• The yield on two-year Treasuries fell two basis points to 1.52%.
• Germany’s 10-year yield decreased three basis points to -0.69%.
• Britain’s 10-year yield gained two basis points to 0.50%.

Commodities

• Gold advanced 1% to $1,543.08 an ounce.
• West Texas Intermediate crude climbed 2.4% to $54.95 a barrel.

--With assistance from Andreea Papuc and Laura Curtis.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Andrew Dunn, Todd White

©2019 Bloomberg L.P.