U.S. allies hit back at Washington’s steel, aluminum tariffs

WASHINGTON/PARIS (Reuters) – Canada and Mexico retaliated against the United State’s decision on Thursday to impose tariffs on steel and aluminum imports and the European Union had its own reprisals ready to go, reigniting investor fears of a global trade war.

The tariffs, announced by U.S. Commerce Secretary Wilbur Ross in a telephone briefing on Thursday, ended months of uncertainty about potential exemptions and suggested a hardening of the Trump administration’s approach to trade negotiations.

The measures, touted by President Donald Trump in March, drew condemnation from Republican lawmakers and the country’s main business lobbying group and sent a chill through financial markets.

The Dow Jones Industrial Average lost 1 percent and the S&P 500 shed around 0.66 percent. Shares of industrial heavyweights Boeing fell 1.7 percent and Caterpillar 2.2 percent.

A 25 percent tariff on steel imports and 10 percent tariff on aluminum imports will be imposed on the EU, Canada and Mexico from midnight (0400 GMT on Friday), Ross told reporters.

“We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved,” he said.

Canada and Mexico, embroiled in talks with the United States to modernize the North American Free Trade Agreement (NAFTA), responded swiftly.

Canada, the largest supplier of steel to the United States, will impose tariffs covering C$16.6 billion ($12.8 billion) on imports from the United States, including whiskey, orange juice, steel, aluminum and other products, Canadian Foreign Minister Chrystia Freeland said.

“The American administration has made a decision today that we deplore, and obviously is going to lead to retaliatory measures, as it must,” Prime Minister Justin Trudeau said at a news conference with Freeland.

Mexico announced what it described as “equivalent” measures on a wide range of U.S. farm and industrial products.

The measures, which target pork legs, apples, grapes and cheese as well as steel and other products, will be in place until the U.S. government eliminates its tariffs, Mexico’s Economy Ministry said.

The S&P 500’s packaged foods and meats industry sub-index fell 2 percent, with shares of meat producer Tyson Foods Inc falling 4 percent, Campbell Soup Co 2.5 percent and spice maker McCormick & Co Inc 3 percent.

The Mexican peso dropped about 1 percent and the Canadian dollar shed about 0.6 percent. At its low, the peso was at its weakest against the dollar in nearly 15 months.

The EU threatened tariffs on Harley Davidson motorcycles and bourbon, measures aimed at the political bases of U.S. Republican legislators. Shares of Harley-Davidson Inc fell 2.17 percent and Brown-Forman Corp, maker of Early Times and other bourbon brands, lost 2.1 percent. EU members have given broad support to a European Commission plan to set duties on 2.8 billion euros ($3.4 billion) of U.S. exports if Washington ends tariff exemptions. EU exports potentially subject to U.S. duties are worth 6.4 billion euros ($7.5 billion).

“It’s entirely up to U.S authorities whether they want to enter into a trade conflict with their biggest partner, Europe,” France’s Finance Minister Bruno Le Maire said after meeting with Ross on Thursday.

U.S. Chamber of Commerce President Tom Donohue warned in a letter seen by Reuters to the body’s board that current trade policies could threaten “economic progress” and cause the loss of more than 2 million jobs, mostly in states that voted for Trump and Republican candidates.

‘SIGNIFICANT THREAT’

The tariffs are part of Trump’s effort to protect U.S. industry and workers from what he described as unfair international competition, a key theme of his “America First” agenda.

FILE PHOTO: A red-hot steel plate passes through a press at the ArcelorMittal steel plant in Ghent, Belgium, May 22, 2018. REUTERS/Yves Herman/File Photo

Temporary exemptions were granted to a number of nations and permanent ones to several countries including Australia, Argentina and South Korea. U.S. trading partners had demanded that the exemptions be extended or made permanent.

The tariffs are aimed at allowing the U.S. steel and aluminum industries to increase their capacity utilization rates above 80 percent for the first time in years.

Shares of U.S. Steel Corp rose 1.7 percent, but AK Steel fell 1.3 percent and Steel Dynamics Inc shed 0.9 percent. Shares of Century Aluminum Co jumped 3.3 percent but Alcoa Corp shed 0.9 percent.

EYES ON CHINA

The U.S. administration also launched a national security investigation last week into car and truck imports, using the same 1962 law it has applied to curb incoming steel and aluminum.

“The Trump administration seems to regard overt threats, including tariffs and repudiation of previous agreements, as a key element for gaining leverage in trade negotiations,” said Eswar Prasad, a former head of the International Monetary Fund’s China division and now a professor at Cornell University.

Prasad warned that the United States was doing so at the cost of alienating key allies and undercutting broad international pressure on China to change its trade and economic practices.

Ross himself heads to Beijing on Friday where he will attempt to get firm deals to export more U.S. goods in a bid to cut America’s $375 billion trade deficit with China.

The Trump administration has demanded that Beijing make concessions and threatened to punish it for allegedly stealing U.S. technology by imposing tariffs on $50 billion of imports from China.

While China is seen at more risk from a trade war as its exports are larger than its imports from the U.S., the operations of American companies in China make substantial sales there, which could be hit by any turn in sentiment. ($1 = 0.8575 euros)

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($1 = 1.2964 Canadian dollars)

Reporting by Eric Walsh, David Shepardson and David Chance in Washington, Ingrid Melander in Paris, Madeline Chambers in Berlin, Philip Blenkinsop in Brussels and Allison Martell in Toronto; Writing by Paul Simao; Editing by Robin Pomeroy and Susan Thomas

Wall St. rebounds; worries over Italy ease

NEW YORK (Reuters) – U.S. stocks ended higher on Wednesday, with the S&P 500 and Dow registering their biggest daily percentage gains since May 4, as signs emerged of an easing of political turmoil in Italy and a surge in oil prices boosted energy stocks.

FILE PHOTO: Traders work at the Citadel Securities post on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 18, 2016. REUTERS/Brendan McDermid/File Photo

Based on the latest available data, The Dow Jones Industrial Average .DJI rose 306.47 points, or 1.26 percent, to 24,667.92, the S&P 500 .SPX gained 34.16 points, or 1.27 percent, to 2,724.02 and the Nasdaq Composite .IXIC added 65.86 points, or 0.89 percent, to 7,462.45.

Reporting by Caroline Valetkevitch; Editing by James Dalgleish

Italy, banks drive Wall Street southward

(Reuters) – U.S. stock markets sank more than 1 percent in value on Tuesday, downbeat guidance on trading from JP Morgan and worries over Italy putting the S&P and Dow Jones Industrial Average on track for their biggest one-day drops in a month.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S. May 22, 2018. REUTERS/Brendan Mcdermid

The political crisis in Rome, and the threat to the euro project it represents, triggered a rush to traditional safe havens like U.S. debt, pulling down U.S. 10-year bond yields and in turn spurring losses for U.S. banks.

JP Morgan corporate and investment bank chief Daniel Pinto drove another round of selling by saying his bank’s second-quarter markets revenue would be flat on the year.

If sustained, the 1.7 percent and 1.3 percent falls in the Dow and the S&P, respectively, would be their biggest daily drops since April 24 and the first of more than 1 percent in May.

The market’s main measure of short term volatility, the CBOE Volatility index, spiked 3.9 points to 17.13, its highest since May 3.

“We’re going to see a lot more days like this. This is what 2018 is going to be like,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

“It doesn’t look, smell or feel like 2017 where we had no volatility, zero tension. You had 12 straight months going higher, that’s unheard of.”

At 13:48 pm. EDT the Dow Jones Industrial Average was down 406.82 points, or 1.64 percent, at 24,346.27, the S&P 500 was down 34.69 points, or 1.27 percent, at 2,686.64 and the Nasdaq Composite was down 46.84 points, or 0.63 percent, at 7,387.02.

Yield on the benchmark U.S. 10-year Treasury notes yield fell to their lowest level since mid-April at 2.84 percent. [US/]

BIG SWINGS

Wall Street has seen a surge in volatility since the start of February, driven by President Trump’s trade attacks on China and concerns over North Korea.

Those moves have slowly eased off, however: the Dow fell by more than 1 percent on five days in each of February and March but only three times in April. On Friday, the VIX opened at its lowest since late January, only 13 points compared to a peak of 50 hit on Feb. 6.

Still, Pinto’s comments pushed JP Morgan shares 4.6 percent lower, their biggest fall since the February sell-off and other major banks followed, pushing the S&P banking index down xx percent.

Shares of energy companies were also led lower by a 1.9 percent drop in U.S. crude futures on expectations that Saudi Arabia and Russia could pump more crude to compensate for a potential supply shortfall. [O/R]

Exxon Mobil fell 1 percent, while Chevron was down 1.3 percent. Halliburton slipped 0.9 percent.

“When you look at lower yields and the lower energy, it’s taking a real bite out of the energy complex and certainly the financial complex,” said Art Hogan, chief market strategist at B. Riley FBR in Boston.

“I don’t think anything has changed (in the last hour or so) but when you call into question one of the larger economies in the euro zone, and what that will mean to the stability of the euro zone, its certainly going to manifest itself into a larger punishment than we saw this morning.”

Reporting by Medha Singh and additonal reporting by Sinead Carew in New York; Editing by Arun Koyyur

China rejects U.S. charge of ‘forced technology transfer’ at WTO

GENEVA (Reuters) – China told the World Trade Organization’s dispute settlement body on Monday that U.S. accusations that Beijing forced companies to hand over technology as a cost of doing business in China were groundless.

FILE PHOTO: U.S. President Donald Trump and China’s President Xi Jinping shake hands after making joint statements at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj/File Photo

U.S. President Donald Trump has accused China of stealing American ideas and announced a plan for a $50 billion tariff penalty against Chinese goods.

Both sides launched legal complaints at the WTO over the issue earlier this year.

“There is no forced technology transfer in China,” Chinese Ambassador Zhang Xiangchen told the meeting, according to a copy of his remarks provided to Reuters.

“According to the U.S.’s view, China forces the U.S. companies to transfer technologies by imposing joint venture requirements, foreign equity limitations and administrative licensing procedures,” Zhang said.

“But the fact is, nothing in these regulatory measures requires technology transfer from foreign companies.”

Zhang said the U.S. argument involved a “presumption of guilt”. The U.S. Trade Representative believed U.S. firms in China faced an obligation to hand over technology, while failing to produce a single piece of evidence.

Some of its claims were “pure speculation”, he said, adding that the USTR saw Chinese M&A activity as a Chinese government conspiracy.

“DILIGENCE AND ENTREPRENEURSHIP”

Technology transfer was a normal commercial activity that benefited the United States most of all, he said, while Chinese innovation was driven by “the diligence and entrepreneurship of the Chinese people, investment in education and research, and efforts to improve the protection of intellectual property.”

Legal experts say Washington needs WTO backing to implement its tariffs as far as they relate to WTO rules, while China has rejected the tariff plan wholesale and resorted to WTO action to stop it.

Under WTO rules, if disputes are not settled amicably after 60 days, the complainant can ask for a panel of experts to adjudicate, escalating the dispute and triggering a legal case that takes years to settle.

The United States, which launched its complaint on March 23, could have used the dispute meeting on Monday to take that step. China could do so at next month’s meeting.

But since the dispute erupted, U.S.-China trade policy has been the subject of high-level bilateral talks. Trump tweeted cryptically that “our trade deal with China is moving along nicely” but that it probably needed a “different structure”.

The United States put China’s technology transfer policies on the agenda of Monday’s meeting, without elaborating. A copy of the U.S. remarks was not immediately available.

Reporting by Tom Miles; Editing by Catherine Evans and Gareth Jones

Qualcomm to meet China regulators in push to clear $44 billion NXP deal: sources

BEIJING (Reuters) – Qualcomm Inc (QCOM.O) is expecting to meet this week in Beijing with China’s antitrust regulators in a final push to secure clearance for its proposed $44 billion acquisition of NXP Semiconductors NV (NXPI.O), three sources told Reuters.

FILE PHOTO: A sign on the Qualcomm campus is seen in San Diego, California, U.S. November 6, 2017. REUTERS/Mike Blake/File Photo

The acquisition has been caught in the crosshairs of rising U.S.-China trade tensions, with sources saying an approval would depend on the progress of broader bilateral talks. The deal has got a nod from eight of the nine required global regulators, with Chinese clearance the only one pending.

Qualcomm is likely to meet Chinese regulators before U.S. Commerce Secretary Wilbur Ross arrives in China on Saturday, the sources briefed on Qualcomm’s discussions said.

A Qualcomm team and officials from the State Administration for Market Regulation (SAMR) met in Beijing on Friday and had “productive” talks, the sources said.

The San Diego-based firm is now “cautiously optimistic” the deal will go forward, one of the sources said, amid recent indications of a thaw in U.S.-China trade tensions that has seen both sides propose tens of billions of dollars in tariffs.

On Friday, the Trump administration said it had reached a deal that would put ZTE Corp (000063.SZ)(0763.HK) back in business after the Chinese telecommunications company pays a $1.3 billion fine and makes management changes.

FILE PHOTO: A man works on a tent for NXP Semiconductors in preparation for the 2015 International Consumer Electronics Show (CES) at Las Vegas Convention Center in Las Vegas, Nevada, U.S. January 4, 2015. REUTERS/Steve Marcus/File Photo

Resolving the ZTE sales ban has been of chief importance to China’s leadership. The firm was banned in April from buying U.S. technology components for seven years after breaking an agreement it reached for violating U.S. sanctions against Iran and North Korea.

“It feels as though it’s getting close to the end,” said the source quoted above.

Qualcomm did not immediately reply to an email from Reuters seeking comment on Sunday, while calls to NXP went unanswered outside regular business hours.

NEW SUBMISSION

Qualcomm is now preparing a new submission to SAMR aimed at providing final guarantees and assurances, the sources said.

China’s market regulator did not immediately respond to a faxed request for comment outside of business hours.

While there are no explicit ties between ZTE’s problems, Sino-U.S. trade tensions and Qualcomm-NXP merger clearance, there are “perceived linkages” and the timing of current discussions is “not coincidental”, two of the sources said.

“The degree to which the two sides are moving to resolve trade tensions clearly has an impact,” one source said.

Qualcomm in recent weeks has moved to restart discussions that have stalled since the end of last year.

The company in April was forced to refile its China anti-trust application to clear the NXP deal, after talks reached a dead end.

Cristiano Amon, Qualcomm’s president, was in China last week, attending a big data industry expo in the southwest province of Guizhou.

Earlier this month, China’s anti-trust regulator approved Qualcomm’s investment with a unit of state-owned Datang Telecom Technology Co. to design, package and test smartphone chipsets, one year after the joint venture was announced.

Reporting By Matthew Miller; Additional reporting by Michael Martina and Elias Glenn; Editing by Himani Sarkar

Investors find little appetite for consumer staples

(Reuters) – The consumer staples index .SPLRCS, the S&P 500’s biggest laggard for 2018, could have further to fall and may even look less appealing as a defensive play in the event the economy turns sour.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 21, 2018. REUTERS/Brendan McDermid

The sector, which includes suppliers of so-called recession-proof items ranging from toilet paper and toothpaste to canned soup and cookies, has fallen 13 percent in 2018, on track for its first annual decline since 2008, while the S&P 500 .SPX is up 1.7 percent year-to-date.

Investors have been turning away from staples companies because they are grappling with changing consumer preferences, fierce competition and other obstacles to raising prices even as their costs swell.

On top of this, the sector – long viewed as a defensive play partly because of its high dividends and predictable growth rate – faces tough competition from fixed income investments while U.S. Treasury yields are rising, and from other equities as most industry groups are generating faster earnings growth.

“We think the sector will remain under pressure, especially as investors have better opportunities elsewhere,” said Sameer Samana, global equity and technical strategist at Wells Fargo Investment Institute in St. Louis.

Consumers are showing less loyalty to food and household brands than ever before, according to Burns McKinney, a portfolio manager at Allianz Global Investors in Dallas. As a result shoppers are more easily drawn toward cheaper store-brands for goods such as toilet paper, putting pressure on brand names.

A growing preference for healthier, fresher food is keeping people away from pre-packaged staples. Health concerns are also hurting tobacco companies such as Altria (MO.N) as smokers increasingly favor cigarette alternatives.

And, as brick and mortar retailers face tough competition from online retailers such as Amazon.com (AMZN.O), they are putting pressure on product suppliers to keep prices low.

For example, Procter & Gamble (PG.N), the world’s largest consumer goods maker, in April pointed to pressure from struggling retailers in addition to higher transportation costs and rising commodities prices when it reported disappointing fiscal third-quarter financial results.

Wall Street currently expects 2018 earnings growth of 11.4 percent in the staples sector, down from the 11.6 percent expected on April 1 and slower than all but two of the S&P 500’s 11 other major sectors, according to Thomson Reuters data.

The broader S&P is expected to report earnings growth of 22 percent for 2018.

(Graphic: Consumer staples have become cheaper – reut.rs/2J39edo)

“We’re right now in an earnings driven market and there are other sectors that have a much better earnings outlook,” said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark. “I don’t see the catalyst for this sector to do well in the near term.”

The consumer staples sector currently trades at 19 times earnings on a 12-month trailing basis, indicating a roughly 10 percent discount to the S&P 500’s multiple of 21, according to Wells Fargo’s Samana. He adds that the “the trough for staples” typically happens when the sector trades at a 20 percent to 30 percent discount to the rest of the market, implying a multiple of 15 to 17.

To be sure lower valuations and a weak economy could eventually give some support to staples.

“We would get interested if valuations lowered to levels that compensated investors to take on the risk of the sector,” said Samana. “They don’t trade all that cheap compared to the market right now.”

Staples stocks tend to perform better than the broader market in a weak economy as investors bet that even if consumers have to cut back on spending they still need to buy things like toilet paper, soap and food basics. But Prudential’s Praveen sees the U.S. economy staying strong through 2018 and 2019.

But some investors like Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, say current valuations could present an opportunity.

“They’re reasonably priced. It doesn’t mean they’re screaming cheap. You can start to accumulate them here,” said Nolte.

But even if investors do look more kindly on the staples sector in economic downturn, the sector’s may be “less of a port in the storm” than in the past, said Wells Fargo’s Samana.

Reporting By Sinéad Carew; Editing by Steve Orlofsky

S&P, Dow lower on oil plunge; chipmakers lift Nasdaq

(Reuters) – The S&P 500 index and the Dow Jones Industrial Average fell on Friday as a steep drop in oil prices pressured energy stocks, but losses were limited by gains in chipmakers and retail stocks.

FILE PHOTO: Traders work at the Citadel Securities post on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 18, 2016. REUTERS/Brendan McDermid/File Photo

U.S. crude declined more than 4.2 percent to $67.71 per barrel after Saudi Arabia and Russia said they were ready to ease supply curbs that have pushed prices to their highest since 2014. [O/R]

The S&P energy index .SPNY slid 3.3 percent, on track for its biggest one-day percentage decline since Feb. 5.

Chevron (CVX.N) dropped more than 4 percent, while Exxon (XOM.N) fell 2.5 percent and were the biggest drags on the Dow.

Stock markets this week have been roiled by trade tensions with China, U.S. threat of imposing tariffs on imported cars and uncertainty over a U.S.-North Korea summit.

President Donald Trump said on Friday the summit with North Korean leader Kim Jong Un could still take place on June 12 as originally planned, a day after canceling it.

“At this point investors are shrugging off Washington headlines because in most cases they won’t affect the markets and Washington has a hard time following through what they say,” said Arian Vojdani, investment strategist at MV Financial in Bethesda, Maryland.

At 12:58 p.m. ET, the Dow Jones Industrial Average .DJI was down 69.89 points, or 0.28 percent, at 24,741.87, the S&P 500 .SPX was down 7.75 points, or 0.28 percent, at 2,720.01 and the Nasdaq Composite .IXIC was up 16.25 points, or 0.22 percent, at 7,440.68.

Trading volumes were thin ahead of the long weekend, with markets shut on Monday for the Memorial Day holiday.

The tech-heavy Nasdaq .IXIC was boosted by chipmakers, led by a 2.7 percent jump in Broadcom (AVGO.O).

A 15.6 percent surge in shares of Foot Locker (FL.N) boosted the consumer discretionary .SPLRCD index after the company reported a better-than-expected quarterly profit and lifted shares in Nike (NKE.N), which has a partnership with the footwear retailer.

“We are at the tail-end of a strong earnings and that’s still playing in. They want to be a part of what looks like a strong year despite any type of headline shock,” said Vojdani.

The S&P 500 banks index .SPLRCBKS fell 0.5 percent after U.S. Treasury yields fell to their lowest level in three weeks. [US/]

Declining issues outnumbered advancers for a 1.17-to-1 ratio on the NYSE and by a 1.09-to-1 ratio on the Nasdaq.

The S&P index recorded 18 new 52-week highs and no new lows, while the Nasdaq recorded 92 new highs and 28 new lows.

Reporting by Medha Singh and additional reporting by Sruthi Shankar in Bengaluru; editing by Patrick Graham and Sriraj Kalluvila

Wall Street dips after Trump cancels North Korea summit, targets car imports

(Reuters) – U.S. stocks dropped on Thursday, but were well off the session lows hit after President Donald Trump canceled a summit with North Korea’s Kim Jong Un and threatened to impose tariffs on auto imports.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 21, 2018. REUTERS/Brendan McDermid

Trump canceled the June 12 meeting citing Pyongyang’s “open hostility,”, even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site.

The market, already lower due to a slide in oil prices and worries over Trump ordering a national security investigation into car and truck imports, dropped sharply after the meeting was called off.

The autos probe, ordered on Wednesday, could lead to new tariffs and China called the move an “abuse” of the national security clauses and said it would defend its interests.

Market participants said the drop after the summit was canceled was a knee-jerk reaction.

“Really not sure why people are looking at it so negatively, except when world politics is unstable, investors’ knee-jerk reaction is to sell first and ask questions later,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“The bigger news has really been the proposed tariffs on foreign cars, the administration provides so much potential change everyday, that it’s difficult for investors to see consistency to the economic future.”

At 13:24 p.m. ET, the Dow Jones Industrial Average .DJI was down 64.85 points, or 0.26 percent, at 24,821.96, the S&P 500 .SPX was down 4.23 points, or 0.15 percent, at 2,729.06 and the Nasdaq Composite .IXIC was up 1.98 points, or 0.03 percent, at 7,427.94.

Earlier in the session the blue chip Dow .DJI fell as much as 1.1 percent to touch a two-week low.

Defense stocks jumped after Trump called off the North Korea meeting and warned that the U.S. military was ready in the event of any reckless acts by North Korea.

Seven of the 11 major S&P sectors were in the red, with financials .SPSY dropping 0.67 percent.

The big banks were trading lower as the minutes from the Federal Reserve’s latest meeting tempered expectations of faster interest rate hikes.

The energy sector .SPNY fell 1.25 percent alongside a slide in oil prices.

U.S. crude future CLc1 declined about 1 percent, with expectations building that OPEC could wind down an output deal due to concerns about supplies from Venezuela and Iran. [O/R]

Ford (F.N) and General Motors (GM.N) gained on the possibility of tariffs on European and Asian car imports. U.S.-listed shares of Fiat (FCAU.N) fell 1.5 percent.

Best Buy Co (BBY.N) tumbled 7.5 percent after the consumer electronics retailer reported a slowdown in quarterly online sales and did not update its full-year outlook.

Advancing issues outnumbered decliners by a 1.01-to-1 ratio on the NYSE and for a 1.02-to-1 ratio on the Nasdaq.

The S&P index recorded 19 new 52-week highs and one new low, while the Nasdaq recorded 89 new highs and 37 new lows.

Reporting by Medha Singh and Savio D’Souza in Bengaluru; Editing by Sriraj Kalluvila

Wall Street remains lower on fresh concerns over U.S.-China trade talks

(Reuters) – U.S. stocks fell on Wednesday as President Donald Trump’s latest comments fueled skepticism over U.S.-China trade talks and ahead of a Federal Reserve report that could indicate the pace of future rate hikes.

FILE PHOTO: Traders work at the Citadel Securities post on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 18, 2016. REUTERS/Brendan McDermid/File Photo

Trump signaled a new direction for the trade talks, saying the current track appeared “too hard to get done”, a day after telling reporters that he was not pleased with the recent talks.

U.S. Treasury Secretary Steven Mnuchin’s announcement over the weekend that the two countries had put the prospect of a trade war “on hold” had raised expectations that the world’s two largest economies would avert a damaging trade war.

“It’s little bit of carry through from yesterday when Trump spoke about trade and that there was going to be some issues with North Korea (summit),” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

The United States is prepared to walk away from negotiations with North Korea if the upcoming talks on its nuclear weapons program head in the wrong direction, said U.S. Secretary of State Mike Pompeo, while expressing hope the summit will take place next month.

The latest uncertainty comes as investors prepare to assess the Federal Reserve’s May meeting minutes, scheduled for release at 2:00 p.m. ET, for indications on how many rate hikes are likely this year.

Policymakers are split between those who see another two rate hikes and those who expect three, in the backdrop of low unemployment, moderate growth and rising inflation.

At 12:33 a.m. EDT the Dow Jones Industrial Average .DJI was down 157.63 points, or 0.63 percent, at 24,676.78, the S&P 500 .SPX was down 11.64 points, or 0.43 percent, at 2,712.80 and the Nasdaq Composite .IXIC was down 12.57 points, or 0.17 percent, at 7,365.89.

Seven of the 11 major S&P sectors were in the red, with financial sector .SPSY leading the declines, down 1.3 percent.

The big banks fell after being outmaneuvered by smaller rivals in the rewriting of the Dodd-Frank law that rolled back some of the restraints imposed following the 2007-2009 global financial crisis.

Industrials .SPLRCI, which as a group are the most sensitive to trade issues, fell 0.9 percent.

Retailers had a mixed day. Target (TGT.N) sank 5.6 percent after the retailer’s quarterly profit rose less than expected as increasing investments dented margins. The results weighed on Walmart (WMT.N), which fell 0.9 percent.

Tiffany (TIF.N) surged 19.6 percent after the jeweler’s quarterly results blew past estimates and the company raised its full-year profit forecast and announced a $1 billion buyback program.

Ralph Lauren (RL.N) soared 16.2 percent after the company’s higher margins helped deliver a solid profit that beat analysts’ estimates.

Lowe’s (LOW.N) gained 9.3 percent after the home improvement retailer maintained its annual financial targets and billionaire investor Bill Ackman was reported to have bought a $1 billion stake in company.

Hewlett Packard Enterprise (HPE.N) slipped 10.3 percent after the company reiterated expectations of moderating growth.

Comcast (CMCSA.O) dipped 1.7 percent after the U.S. cable operator said it was preparing to top Disney’s (DIS.N) offer for certain Twenty-First Century Fox (FOXA.O) assets.

Disney fell 1.4 percent, while Fox rose 1.8 percent.

Declining issues outnumbered advancers for a 1.31-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.12-to-1 ratio on the Nasdaq.

The S&P index recorded 4 new 52-week highs and 1 new lows, while the Nasdaq recorded 58 new highs and 33 new lows.

Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila

Wall Street edges higher as U.S.-China trade talks progress

(Reuters) – U.S. stocks edged higher on Tuesday, led by financial and energy stocks, as the United States and China made progress on ironing out their trade differences and reach an agreement.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 10, 2018. REUTERS/Brendan McDermid/File Photo

Washington neared a deal to lift its ban on U.S. firms supplying Chinese telecoms gear maker ZTE Corp (000063.SZ), sources said on Tuesday, while Beijing said it will steeply cut import tariffs for automobiles and car parts.

That pushed up shares of Ford (F.N), General Motors (GM.N) and Fiat Chrysler (FCAU.N) between 0.6 percent and 1.3 percent, but the broader industrial sector .SPLRCI dipped 0.4 percent, a day after posting its best one-day percent gain in nearly two months as the China-U.S. trade spat was put “on hold”.

The consumer discretionary index .SPLRCD fell 0.2 percent on disappointing quarterly reports from retailer Kohl’s and homebuilder Toll Brothers.

“I don’t think today there is any news that’s particularly concerning other than disappointing guidance from Kohl’s and disappointing results from Toll Brothers,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

“I don’t think it’s anything other than some profit taking.”

At 11:53 a.m. EDT the Dow Jones Industrial Average .DJI was down 30.45 points, or 0.12 percent, at 24,982.84, the S&P 500 .SPX was up 3.56 points, or 0.13 percent, at 2,736.57 and the Nasdaq Composite .IXIC was up 4.93 points, or 0.07 percent, at 7,398.96.

Eight of the 11 major indexes were trading higher. The financials sector SPSY gained 0.9 percent on hopes that a bill aimed at easing rules, put in place after the financial crisis, could be passed into law as soon as this week, helping banks.

The energy sector .SPNY advanced 0.6 percent as oil prices rose on supply concerns. [O/R]

Among stocks, Micron (MU.O) jumped 6.7 percent after the compay announced a $10 billion share buyback program.

Steel stocks gained, led by a 3.5 percent jump in AK Steel (AKS.N) and U.S. Steel (X.N), after the United States said it would impose steep import duties on steel products that originated in China but were shipped from Vietnam to evade anti-dumping and anti-subsidy orders.

Kohl’s (KSS.N) tumbled 6.9 percent, weighing on other retailers, after warning of slower growth in the second half of the year. Macy’s (M.N) fell 3.8 percent.

Toll Brothers (TOL.N) sank 7.5 percent after posting disappointing quarterly profit and margins, while its comments on costs hit other homebuilders. The PHLX housing index .HGX fell 1 percent.

Advancing issues outnumbered decliners by a 1.52-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.27-to-1 ratio on the Nasdaq.

The S&P index recorded 29 new 52-week highs and no new lows, while the Nasdaq recorded 131 new highs and 26 new lows.

Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila