Tech Decline Overrides U.S.-China Trade Optimism

U.S. stocks were mixed as a slump in technology and financial shares offset optimism that trade talks with China will resume before the Trump administration imposes another round of tariffs. Crude oil posted its best two-day increase since June. The Dow Jones Industrial Average was whipsawed by a Wall Street Journal report that the U.S. was reaching out to Chinese officials, fluctuating by over 200 points. Comments later from 3M’s chief financial officer on rising raw material costs helped to push the Dow into the red. The Nasdaq was lower much of the day, while the S&P 500 was little changed. Chipmakers dropped earlier after Goldman and Stifel downgraded several U.S. peers amid mounting industry concerns.

Semiconductors are “a key indicator for the broader technology sector, and for the general stock market going forward,” Matt Maley, an equity strategist at Miller Tabak & Co., wrote in an email. “If the semis do indeed break-down from here as we move through the rest of September, it could/should lead to investors to rotate away from the tech stocks in a more meaningful fashion than they did last week.”

Brent crude traded near a two-month high as shrinking oil inventories pointed to an increasingly tight global market. Meanwhile, Hurricane Florence threatens to disrupt fuel supplies as it moves toward North Carolina.

Central banks are back in the spotlight this week. Market participants are watching for policy meetings scheduled for the European Central Bank and Bank of England, as well as Turkish and Russian central banks. Meanwhile, investors will be gauging the potential for extreme weather to disrupt economic activity, as threats from trade tension and Brexit negotiations linger.