S&P 500 snaps its 3-day winning streak
U.S. stocks closed lower Tuesday as a swift sell-off in the final minutes of trading wiped out earlier gains and snapped a three-day winning streak for the market.
Technology companies and banks led the market slide, outweighing gains in health care and energy stocks. The Dow Jones industrial average and S&P 500 each fell 0.5 percent. The Nasdaq composite fell nearly 1 percent, while smaller companies bucked the trend with modest gains.
The trading session was shortened ahead of the Independence Day holiday. Once investors return Thursday, they’ll have no shortage of reasons to snap out of the holiday lull by the end of the week.
On Friday the U.S. is set to impose a 25 percent tariff on $34 billion worth of Chinese imports. And China is expected to strike back with tariffs on a similar amount of U.S. exports. The big question is how far the two countries will go in their dispute over trade.
“The market might get worked up about a tit-for-tat retaliation, which we’ll probably see,” said Scott Wren, senior global equity strategist for the Wells Fargo Investment Institute. “There’s a relatively low probability of an all-out trade war.”
The Trump administration has said it won’t target an additional $16 billion worth of Chinese goods until it gathers further public comments. It’s also identifying an additional $200 billion in Chinese goods for 10 percent tariffs, which could take effect if Beijing retaliates.
Uncertainty over U.S. trade policy has hung over the market since late February. The S&P 500 posted two consecutive weekly declines heading into this week.
Investors will also have their eye Friday on the Labor Department’s latest monthly jobs and wage report.
Analysts expect the report will show that hourly wages rose 2.8 percent last month. But if it comes in above 3 percent, that could be a bad day for the market, Wren said.
“The market is paying very close attention to wage pressure, very close attention to anything that’s going to hurt corporate margins, anything that’s going to make the Fed want to quicken the pace and magnitude of interest rate hikes,” Wren said.
On Tuesday, gainers slightly outnumbered decliners on the New York Stock Exchange, with small-company stocks faring better than the overall market. Trading volume was lighter than usual going into Wednesday’s U.S. market holiday.
Crude oil futures pared some of their early gains. Benchmark U.S. crude added 20 cents to $74.14 a barrel in New York. The contract reached more than $75 a barrel in early trading. Brent crude, used to price international oils, rose 46 cents to $77.76 a barrel in London.