Monday's Stock Market Close: Economy Jitters, China Trade Talks Weigh On US Markets

Jitters about the economy and worry over U.S.-China trade talks pushed stocks lower Monday as political turmoil roiled Washington.

The Dow Jones Industrial Average dropped to 26,477, off 96 points or 0.36%. The Nasdaq Composite fell to 7,956, dropping 26 points or 0.33%, while the S&P 500 lost 13 points to 2,938, off 0.45%.

Volume on the New York Stock Exchange topped 2 billion shares with 1,199 issues advancing and 1,731 declining. Seventy-four stocks hit new highs and 34 established new lows.

Leading the most actives were Advanced Micro Devices (AMD), Bank of America (BAC) and Apple (AAPL), which rose following the U.S. Supreme Court’s decision not to hear an appeal in the University of Wisconsin’s claim the iPhone-maker appropriated technology incorporated in the 5s, 6 and 6 Plus without permission.

The U.S. Federal Reserve reported consumer credit increased more than expected in August with Americans owing $17.9 billion more than they did in July. Credit expanded at an annual rate of 5.2% after growing 6.7% or $23 billion the preceding month. Lending by the federal government increased $19.4 billion, mainly for student loans. Nonrevolving debt $19.8 billion or 7.75% while revolving debt fell $1.9 billion or 2.25%. The report does not include debt secured by real property like home mortgages.

Companies tried to temper investor expectations in advance of third-quarter earnings reports due in coming weeks. Wynn Resorts (WYNN), Macy’s (M) and Tyson Foods (TSN) already have been talking down results.

FactSet data indicates analysts expect S&P 500 companies to report a 4% drop in third-quarter earnings.

Economic reports last week showed a 10-year low in September manufacturing and expansion in the service sector slowed to its lowest pace in three years. The U.S. unemployment rate is at a half-century low, but the economy added only 135,000 jobs last month.

Traders were keeping an eye on Washington where high-stakes trade negotiations are underway between U.S. and Chinese officials. Prospects were dimming for a wide-ranging agreement with reports China has no intention of addressing industrial policy reform or government subsidies.

“A ‘grand’ deal between the U.S. and China has a very low probability of being reached. It is just not a possibility because the two sides are on opposite sides of the issues,” said Rick Lear, founder and chief investment officer at Lear Investment Management.

“However, China does need our agricultural products and the U.S. needs to sell to China, so there could be a ‘mini’ deal. But, both governments are very willing to subsidize their people to keep the trade war going.”

President Trump has said he’s not interested in a deal covering just agricultural issues, and he’d rather have no deal than a “bad” deal.

On global markets, Hong Kong’s Hang Seng closed 1.11% lower while Japan’s Nikkei 225 was 0.16% down and China’s Shanghai Composite fell 0.92%. Australia’s S&P/ASX rose 0.71%.

London’s FTSE closed up 0.59% while the German DAX added 0.7% and the French CAC 40 was up 0.61%. The Stoxx Europe 600 ended the day at 392.91, up 0.71%.

The British pound was off 0.28% at $1.23 while the euro dipped 0.04% to $1.0976. The dollar index gained 0.17%.

Oil futures were higher. Crude oil rose to $52.91, up 10 cents, while Brent crude rose to $58.48, up 14 cents. Gold and silver futures were lower. Gold fell $15.20 to $1,497.70 an ounce while silver dropped 15 cents to $17.475 an ounce.

Yield on the 10-year Treasury note