US open: Stocks down on trade concerns, FANG drop

US stocks headed into some rough water at the open on Wednesday ahead of the resumption of trade talks with Canada and as investors mulled the possibility that Trump could impose further tariffs on China this week.

At 1520 BST, the Dow Jones was down 0.06% at 25,939.75, while the S&P 500 was 0.42% weaker at 2,884.58 and the Nasdaq was a whole 1.03% softer at 8,008.30.

Weighing on investor sentiment towards the latter was testimony from executives at Facebook and Twitter before a Senate Intelligence Committee.

Nevertheless, Deutsche Bank's Binky Chadha maintained his 3,000 year-end target for the S&P 500 on Wednesday, noting that multiples were back at pre-Presidential election levels and that US macro growth looked set to remain robust.

"The rally has been all about earnings and we expect 20%+ growth to continue in H2, 11% in 2019," the analyst wrote.

Canadian foreign minister Chrystia Freeland was due to meet US trade representative Robert Lightizer in Washington later on Wednesday after the US and Canada failed to agree to a trade deal last Friday, the original deadline. Canadian PM Justin Trudeau reiterated on Tuesday that the country would not sign a deal that would be inherently against its economic interests.

Oanda analyst Craig Erlam said: "Canada and the US are set to resume talks on Wednesday in an effort to bridge the divides that still exist on NAFTA and prevent the 24-year old deal being terminated by President Donald Trump, as he has threatened to do if the renegotiation isn’t successful."

"Trump has threatened to tear up the agreement and replace it with a bilateral deal with Mexico is Canada doesn't agree to the concessions that the US is demanding, which would likely be damaging for both countries should Congress support the decision, but prove to everyone else that he isn't bluffing."

Market participants were also mulling over the possibility that Trump could announce 25% tariffs on another $200bn of Chinese imports over the next day or two.

"Trump may have been aiming to get NAFTA over the line ahead of the mid-terms but I think he's in this one for the long run and the Chinese don't appear to be in any mood to back down, even if they aren't able to respond with the same volume of tariffs," said Erlam.

In corporate news, Harley-Davidson picked up 1.03% after announcing that it will open a research and development facility in Silicon Valley to support its plans for a line of electric vehicles.

HD Supply dipped 2.29% in early trade despite its quarterly earnings and revenue beat expectations.

Facebook and Twitter lost 0.84% and 3.93%, respectively, as executives from both companies began to testify before US lawmakers over politics and the internet.