U.S. Stock ETFs Stumble on Speculation of Trade Deal Delays

U.S. markets and stock ETFs dipped Wednesday on speculation the long-awaited U.S.-China trade deal could be pushed back until December.

On Wednesday, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 0.1%, and SPDR S&P 500 ETF (NYSEArca: SPY) was 0.1% lower.

A senior White House official revealed that a meeting where President Donald Trump and Chinese President Xi Jinping would sign an interim trade deal could be delayed until December as both sides hash out details over terms and a venue, Reuters reports.

Quincy Krosby, chief market strategist at Prudential Financial, argued that while the year-end is typically bullish for the markets, an overhanging trade war still poses a short-term risk that could upend the positive momentum. Additionally, “there’s been concern the market was moving toward overbought conditions,” she added.

Signs of progress in trade talks between the United States and China have fueled the recent market rally toward new records, along with a mostly upbeat earnings season.

Best-Case Scenario

Given the uncertainty over a trade deal, “seeing a quiet pause at new highs is the best-case scenario right now,” Frank Cappelleri, executive director at Instinet, told the Wall Street Journal.

Investors remain cautious of any trade developments after being burned in the past. Markets are seeking clarity on concessions offered by China and the U.S. as nothing concrete has been revealed yet.

“The market’s a bit shy when it comes to the trade stuff and doesn’t want to pull the trigger until they see these things in writing,” Shawn Snyder, the head of the investment strategy at Citi Personal Wealth Management, told the WSJ.

“It’s longer than they wanted and the longer it stretches out, the greater the risk it blows up,” Art Cashin, director operations at UBS, told CNBC.

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