US close: Stocks snap winning streak as trade tensions linger

20 August 2019

(Sharecast News) - Stocks closed lower on Tuesday as market participants were focussed on the state of US-China relations and the outlook for monetary policy.
At the close, the Dow Jones Industrial Average was down 0.66% at 25,962.44, while the S&P 500 lost 0.79% to 2,900.51 and the Nasdaq Composite closed out the session 0.68% weaker at 7,948.56.

The Dow closed 173.35 points lower on Tuesday, snapping a three-day winning streak. The index saw out the previous session in the green, as investors reacted to news from the weekend that <em>the Commerce Department</em> would grant Chinese telco giant <strong>Huawei</strong> a further 90-day reprieve from a prohibition on US companies trading with it.

But tensions with China remained a major focal point of Tuesday's session after Donald Trump said he had no desire to work with Huawei despite the Commerce Department granting the reprieve.

Elsewhere, the outlook for further easing by Federal Reserve was front and centre on investors' minds ahead of the release of minutes from the Central Bank's meeting on Wednesday. Trump called on the Fed, on Monday, to cut rates by at least 100 basis points.

Fed chair Jerome Powell was set to deliver the keynote speech at the Jackson Hole central banking symposium on Friday, while the Federal Open Market Committee was next set to meet to decide on policy on 17-18 September, when another 25 basis point reduction in the target range for the Fed funds rate was widely expected.

Looking abroad, fears over Italy's political situation grew after Prime Minister Giuseppe Conte resigned following a spat with Matteo Salvini, leader of the League party

In terms of data, <em>the Federal Reserve Bank of Philadelphia</em> revealed that non-manufacturing general business activity for the region plummeted to 7.5 versus the 21.4 reading turned in a month prior.

Fed chair for banking supervision, Randal Quarles, was due to deliver a speech at 1700 BST.

On the corporate front, <strong>Home Depot</strong> moved ahead 4.40% in the session after turning in better-than-expected profits, while <strong>Medtronic</strong> gained 2.62% after coming in ahead of quarterly sales estimates.

With trade woes still in focus, tech-related stocks such as <strong>Micron Technology</strong> and <strong>Advanced Micro Devices</strong> dipped during the session, while <strong>Netflix</strong> shares pulled back 3.36%.

Also, <strong>Citigroup, Bank of America</strong> and <strong>JP Morgan Chase</strong> all dropped more than 1% as the benchmark 10-year yield hovered at around 1.549%.