U.S. stocks ended lower Wednesday after Reuters reported an initial U.S.-China trade deal might not be completed by the end of 2019. The Dow and Nasdaq each posted their biggest one-day drops since late October, while the S&P 500 fell the most in more than five weeks.
Negotiators in Washington and Beijing remain in a deadlock over points including the extent of tariff rollbacks as part of a phase one deal, according to the Reuters report, which cited unnamed people briefed on the talks. U.S. officials previously suggested the deal would be signed in December, with President Donald Trump having first touted the early agreement in October.
Here’s where the markets settled Wednesday at the end of regular equity trading:
S&P 500 (^GSPC): -0.38%, or 11.72 points
Dow (^DJI): -0.4%, or 112.93 points
Nasdaq (^IXIC): -0.51%, or 43.93 points
WTI crude oil prices (CL=F): +3.4% to $57.11 per barrel
10-year Treasury yield (^TNX): -5.1 bps to 1.735%
Gold (GC=F): -0.11% to $1,472.70 per ounce
The Reuters report added to earlier concerns over prospects for the interim trade deal. Trump threatened to raise tariffs on Chinese imports if the two sides are unable to break through their stalemate and come to an interim agreement, according to a report from CNBC Tuesday.
Also late Tuesday, the U.S. Senate unanimously passed legislation that would support pro-democracy protestors in Hong Kong, who have drawn the ire of China’s President Xi Jinping and stirred up months of turmoil in the semi-autonomous region. The Senate was widely expected to pass the bill after fast-tracking the legislation late last week in the wake of escalating violence in Hong Kong.
Market participants widely recognized the complications the legislation could inject into the already muddled China trade negotiations. U.S. stock futures had been lower overnight, and the Hong Kong Hang Seng (^HSI) closed lower by 0.75%.
The bill would require that the State Department determine at least once per year that the region – a major global financial hub – retained enough autonomy from China to justify its special trade status with the U.S. The legislation also requires that the president impose sanctions on individuals, including Chinese officials, found to violate internationally recognized human rights in Hong Kong. A related bill passed the House of Representatives last month.
Beijing re-upped its warnings to take unspecified countermeasures if President Donald Trump were to sign the legislation into law. In a statement Tuesday, Chinese Foreign Ministry spokesperson Geng Shuang said the Senate bill “neglects facts and truth, applies double standards and blatantly interferes in Hong Kong affairs and China’s other internal affairs.”
“The U.S. should immediately stop interfering in Hong Kong affairs and China’s other internal affairs, or the negative consequences will boomerang on itself,” the spokesperson said in the statement. “China will have to take strong countermeasures to defend our national sovereignty, security and development interests if the U.S. insists on making the wrong decision.”
ECONOMY: Federal Reserve releases October meeting minutes
The Federal Reserve released minutes from its October meeting Wednesday at 2 p.m. ET, detailing the deliberations that ultimately led to the central bank’s third consecutive rate cut this year.
The meeting notes underscored the fact that most Federal Open Market Committee members felt key interest rates would be “well calibrated” after their latest quarter-point cut in October, supporting “the outlook of moderate growth, a strong labor market, and inflation near the Committee’s symmetric 2 percent objective.”
Rates would “likely would remain so as long as incoming information about the economy did not result in a material reassessment of the economic outlook,” the minutes added, while noting the future direction of monetary policy was not on a “preset course.”
The minutes broadly reiterated messaging from FOMC members in recent days, with many of these officials suggesting rates would remain on hold unless growth prospects or the inflation outlook changed significantly. According to the minutes, “a couple” of participants who had supported the October rate cut did so by a “close call relative to the option of leaving the federal funds rate unchanged.”
STOCKS: Target hits an all-time high, Lowe’s raises guidance
Target (TGT) posted better than expected third-quarter results and raised guidance heading into the holiday season, dodging the woes reported by retailers earlier this week including Kohl’s (KSS) and Home Depot (HD).
Closely watched comparable sales rose 4.5% in the quarter, one percentage point better than expected, based on Bloomberg consensus data. Adjusted earnings per share from continuing operations were $1.36 on sales of $18.67 billion, better than the $1.19 per share on sales of $18.22 billion expected. Digital sales jumped 31%, continuing their double-digit percentage leaps higher.
For the full fiscal year, Target said it expects adjusted earnings per share of between $6.25 and $6.45, up from the $5.90 to $6.20 seen previously. The stock held onto gains from early trading and opened at an all-time high above $120 per share.
Lowe’s (LOW) posted better than expected earnings in the third quarter, raised full-year profit guidance and announced a restructuring plan for its Canadian operations as the home improvement retailer works to streamline its operations and shutter underperforming brick and mortar locations.
Third-quarter adjusted earnings were $1.41 a share on net sales of $17.39 billion, versus the $1.35 a share on $17.7 billion in sales expected. Lowe’s sees full-year adjusted earnings of between $5.63 to $5.70 a share, raising this from a range of between $5.45 to $5.65 a share previously.
As part of a multi-prong restructuring plan, Lowe’s said it plans to close 34 underperforming stores in Canada, a region that exited fiscal 2018 with 279 locations.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: