Stocks Halt Rally Amid Lingering Trade-War Risks: Markets Wrap

A historic stock-market run came to a halt as President Donald Trump's latest tariff remarks provided little relief to investors bracing for the impacts of his trade war on the economy and corporate earnings.

Following its longest winning streak in about 20 years, the S&P 500 fell nearly 1%. While Trump suggested some deals with trading partners could come as soon as this week, he signaled no imminent accord with China. As the president extended his restrictive policies on US imports to the entertainment sector, shares of companies like Netflix Inc. and Walt Disney Co. got pummeled.

Recent economic data seems to have assuaged market concerns of a recession, but the outcome of Trump's tariff war has yet to be felt. For several market observers, tariffs will eventually slow the US economy as supply chains are upended and consumer confidence tumbles, with the increases in levies possibly delivering at least a temporary inflation shock.

A trade deal with China would be a prerequisite for the US stock market to reclaim its all-time highs, according to strategists at Morgan Stanley led by Michael Wilson.

“The S&P 500 erased the tariff selloff with one of its strongest bursts of short-term momentum of the past 20 years, but it remains to be seen whether that can translate into a fresh bull market,” said Chris Larkin at E*Trade from Morgan Stanley.

Attention will soon shift to this week's Federal Reserve decision after bond traders dialed back rate-cut bets that had steadily mounted as Trump's trade war unleashed havoc in financial markets. 

As long as the labor market holds firm, the central bank can more easily justify the standing pat. While Fed Chair Jerome Powell and his colleagues would typically welcome the latest inflation cooling, higher US duties on imports risk upending the progress they've made on that front.

Corporate Highlights:

• Palantir Technologies Inc. investors have been betting that the results coming after the markets close on Monday will be another blowout, but the recent run up has given the stock a high bar to clear.

• Berkshire Hathaway Inc. followed Chief Executive Officer Warren Buffett's recommendation, naming Vice Chairman Greg Abel to replace the billionaire as CEO, effective Jan. 1.

• Tyson Foods Inc.'s earnings jumped more than expected as increased profits from chicken sales outweighed another quarter of losses at the company's beef business.

• Shell Plc is working with advisers to evaluate a potential acquisition of BP Plc, though it's waiting for further stock and oil price declines before deciding whether to pursue a bid, according to people familiar with the matter.

• Sunoco LP agreed to acquire Parkland Corp., one of the largest owners of gas stations in Canada, for about $9.1 billion including debt.

Some of the main moves in markets: 

Stocks

• The S&P 500 fell 0.8% as of 9:48 a.m. New York time

• The Nasdaq 100 fell 0.8%

• The Dow Jones Industrial Average fell 0.5%

• The Stoxx Europe 600 was little changed

• The MSCI World Index fell 0.6%

• Bloomberg Magnificent 7 Total Return Index fell 0.9%

• The Russell 2000 Index fell 0.9%

Currencies

• The Bloomberg Dollar Spot Index fell 0.4%

• The euro rose 0.5% to $1.1356

• The British pound rose 0.4% to $1.3323

• The Japanese yen rose 0.9% to 143.61 per dollar

Cryptocurrencies

• Bitcoin fell 2.1% to $93,760.25

• Ether fell 2.1% to $1,798.62

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.32%

• Germany's 10-year yield declined two basis points to 2.52%

• Britain's 10-year yield advanced three basis points to 4.51%

Commodities

• West Texas Intermediate crude fell 1.4% to $57.48 a barrel

• Spot gold rose 2.4% to $3,316.91 an ounce