Trade tensions return, pushing stocks lower again

Last Updated Mar 4, 2018 4:21 PM EST

NEW YORK - U.S. stocks fell for the third consecutive day Wednesday as investors returned to worrying about tariffs and decreased international trade that could hurt U.S. industrial companies. Banks also lost ground as bond yields declined. Department stores and other retailers slipped after the Commerce Department said retail sales fell in February.

The S&P 500 index lost 15 points, or 0.6 percent, to end at 2,749. The Dow Jones industrial average lost 249 points, or 1 percent, to finish at 24,758. Earlier it fell as much as 338 points – after opening the day higher by more than 100 points.

The Dow, comprising 30 large multinational companies, has been hit hard by concerns about tariffs -- down 4 percent since Feb. 26.

The Nasdaq composite fell 14 points, or 0.2 percent, to finish at 7,497. And the Russell 2000 index of smaller-company stocks declined 8 points, or 0.5 percent, to close at 1,584.

Investors remained focused on the potential for new trade actions from President Donald Trump as leaders in Europe warned about the risks of trade disputes. European Union head Donald Tusk urged Mr. Trump to pursue more cooperation with Europe instead of putting tariffs on European goods.

The EU wants an exemption from the tariffs on aluminum and steel imports that Mr. Trump recently announced and has said it could retaliate with tariffs of its own. Meanwhile, German Chancellor Angela Merkel said she can't predict if those talks will succeed.

Stocks slumped after Trump announced his tariff plans last week. They recovered somewhat after the administration said it would grant exemptions to some countries, but have slipped again as investors worried about more tensions with Europe and China.

"Since the correction investors have been a little bit more sensitive to risk," said Karyn Cavanaugh, senior market strategist at Voya Investment Strategies. "Before the correction investors were almost bulletproof."

President Trump is also reportedly considering tariffs that would hit up to $60 billion in Chinese imports. The push comes after Mr. Trump placed tariffs of 25 percent and 10 percent on U.S. imports of steel and aluminum, respectively. He also has touted the benefit of trade wars, even amid warnings from governments including China, Mexico, Canada and the EU about potential retaliation. 

Mr. Trump on Tuesday announced that CIA Director Mike Pompeo would replace Rex Tillerson as Secretary of State, adding to uncertainty over White House diplomacy and deepening disarray in the Trump administration. The upheaval also adds to concerns over tensions between the U.S. and North Korea.

Despite the tensions, U.S. chief executives are expressing optimism about hiring and spending, according to the most recent poll by the Business Roundtable. The survey found the economic outlook from CEOs of some of America's biggest companies reached a 15-year high, bolstered by the GOP tax cuts. The poll was conducted before Mr. Trump's tariff decision. 

Global shares were mixed Wednesday as Asian markets fell after news of Tillerson's exit.

"Over and above the reflection of chaos within the U.S. administration, the removal of another balancing voice in the White House shortly after ex-economic adviser Gary Cohn's departure certainly induced jitters within the market," said Jingyi Pan, market strategist at IG in Singapore.

France's CAC 40 added 0.2 percent to 5,254.76. Germany's DAX climbed 0.2 percent to 12,245.56 and Britain's FTSE 100 gained nearly 0.2 percent to 7,149.96. U.S. shares were set to drift higher, with Dow futures up 0.3 percent at 25136 and S&P 500 futures also 0.3 percent higher at 2,780.00.

Japan's benchmark Nikkei 225 lost 0.9 percent to close at 21,777.29. Australia's AS&P/ASX 200 dipped 0.7 percent to 5,935.30. South Korea's Kospi fell 0.3 percent to 2,486.08. Hong Kong's Hang Seng dropped 0.5 percent to 31,435.01, while the Shanghai Composite slipped 0.6 percent to 3,291.38. Shares also fell in Southeast Asia.

Benchmark U.S. crude added 20 cents to $61 a barrel on the New York Mercantile Exchange. It slumped 65 cents to $60.71 a barrel in overnight. Brent crude, used to price international oil, advanced 20 cents to $64.84 per barrel.