U.S. stocks and ETFs soured in mid-day trading Monday, erasing early morning gains as anxious investors watch the direction of the trade talks and the ongoing growth of the economy.
On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was down 0.4%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 1.2% and SPDR S&P 500 ETF (NYSEArca: SPY) slipped 1.2%, with the Dow Jones Industrial Average plummeting more than 300 points after gaining more than 100 points in the early morning session.
The U.S. and China were in the final stretch of completing a trade deal after months of bickering with Beijing offering lower tariffs and other restrictions on U.S. goods while Washington considered removing most sanctions since last year, the Wall Street Journal reports.
“There’s a desire from investors for a more concrete trade pact,” Eric Freedman, chief investment officer at U.S. Bank Wealth Management, told the WSJ. “Will the tariffs against China be phased out, or will they be dropped cold turkey? That’s what’s really holding back progress in the stock market.”
Some investors may have just took an opportunity to lock in gains and sell ahead of any concrete evidence in a final trade deal.
“Markets expect a deal by the end of March, but the key here will be whether the deal results in the removal of all tariffs,” Tom Essaye, founder of The Sevens Report, told CNBC. “The reports this morning imply that might happen, but it will have to become reality for US-China trade to provide a sustainable positive catalyst for stocks.”
Furthermore, investors are now looking at economic data to affirm further growth ahead.
“As financial markets have already taken note of these positive developments [in trade], the onus is now on the economic indicators to play their part by confirming our expectations of this growth rebound,” Chetan Ahya, chief economist at Morgan Stanley, said in a note.
The Commerce Department also revealed construction spending slipped 0.6% in December, compared to economists’ forecasts of a 0.2% gain, CNBC reports.
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