US Markets

Stocks close lower as Trump says China trade talks may not be successful

Key Points
  • The Dow lost 54 points, while the S&P 500 and Nasdaq declined 0.1 percent and 0.2 percent, respectively.
  • "Will that be successful? I tend to doubt it," Trump said Thursday afternoon as the U.S. and China kicked off the second round of trade talks.
  • Tech shares hit their session lows after Trump made his remarks Thursday.
  • Higher interest rates also pushed stocks lower. The benchmark 10-year Treasury note yield broke above 3.1 percent for the first time since 2011
Dow slips as Cisco and Walmart shares slide, rates rise
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Dow slips as Cisco and Walmart shares slide, rates rise

Stocks fell on Thursday after President Donald Trump indicated trade talks between the U.S. and China may not be fruitful.

The Dow Jones industrial average closed 54.95 points lower at 24,713.98, with Cisco Systems and Walmart dropping 3.8 percent and 1.9 percent, respectively. The declined 0.1 percent to 2,720.13 as tech declined 0.5 percent. The Nasdaq composite slipped 0.2 percent to 7,382.47 with Amazon, Netflix, Apple and Alphabet all falling.

"Will that be successful? I tend to doubt it," Trump said Thursday afternoon as the U.S. and China kicked off the second round of trade talks. "The reason I doubt it is because China has become very spoiled. The European Union has become very spoiled. Other countries have become very spoiled, because they always got 100 percent of whatever they wanted from the United States."

Tensions between the U.S. and China have increased in recent months as both countries have hit each other with tariffs targeting some of their exports. The U.S. also banned companies from exporting goods to Chinese tech companies ZTE. Those tensions have sparked worries that the two largest world economies could engage each other in a trade war.

Economic expansion can continue for 18 to 36 months, expert says
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Economic expansion can continue for 18 to 36 months, expert says

"China will placate the U.S., but how we get there is very complicated and the market has to digest that," said Salvatore Ruscitti, equity specialist at MRB Partners. "If you look at what happened over the weekend, it suggests the negotiations will take some time."

Tech shares hit their session lows after Trump made his remarks Thursday. The Technology Select Sector SPDR ETF (XLK) closed 0.5 percent lower.

Higher interest rates also helped push stocks lower. The benchmark 10-year Treasury note yield broke above 3.1 percent for the first time since 2011, while the two-year yield hovered around its highest levels in a decade.

"Interest rate sensitivity has been the most significant negative factor over this period. Given the substantial repricing of short term interest rates since September this is hardly surprising," Michael Shaoul, chairman and CEO of Marketfield Asset Management, wrote in a note.

Investors have been selling Treasurys amid fears that rising inflation could lead the Federal Reserve to tighten monetary policy faster than the market is expecting.

"There's a tug-of-war between the positives — good economic data, strong earnings and tax cuts — and all the negatives, including geopolitics, higher interest rates and trade talks with China," said Jeff Carbone, managing partner of Cornerstone Financial Partners.