US close: Stocks close lower as optimism turns to caution
Stocks closed at a two-week low on Monday as investors grew cautious after initially celebrating a potential landmark trade deal between the US and China.
At the close, the Dow Jones Industrial Average was down 0.79% at 25,819.65, while the S&P 500 had lost 0.39% to 2,792.81 and the Nasdaq traded 0.23% weaker at 7,577.57.
The Dow, which was up as much as 110 points at the bell, reversed earlier gains to close the session 206 points lower.
During the session, market participants mulled reports that the US and China were nearing a deal that could lift most, if not all, US tariffs if Beijing sticks to a range of pledges such as better protection of intellectual rights and the acquisition of a significant amount of US products.
Bloomberg cited people familiar with the talks as saying that Chinese officials have made it clear that removing levies on $200bn-worth of Chinese goods quickly was necessary in order to finalise any deal. They said one of the remaining sticking points is whether the tariffs would be lifted immediately or over a period of time.
At the weekend, The Wall Street Journal had reported that Trump and Xi could sign a formal trade pact at a summit on 27 March.
Chris Beauchamp, chief market analyst at IG, said: "Hopes that Trump and Xi will sit down later in the month to hammer out a resolution have buoyed equities, but given the outcome of last week’s US-NK chit-chat perhaps a more sanguine approach would make sense."
Also over the weekend, Trump took some time to take shots at Federal Reserve Chairman Jerome Powell as part of long speech at the Conservative Political Action Conference in Maryland.
"We have a gentleman that likes a very strong dollar at the Fed," said Trump.
"I want a strong dollar, but I want a dollar that is great for our country not a dollar that is so strong that it is prohibitive for us to be dealing with other nations".
Trump also took aim at his usual targets - Democrats, environmentalists and special counsel Robert Mueller and his probe into the President's dealings with Russia.
In corporate news, shares in Children's Place closed 10.34% lower after the retailer of kids' apparel and accessories' fourth-quarter earnings and revenue missed analysts' expectations and homewares retailer Bed Bath and Beyond lost 5.33% in the session after analysts at Barclays downgraded the stock from 'equal weight' to 'underweight'.
Shares in Eli Lilly were down 1.07% at the close after the pharmaceutical group said it was introducing a new version of insulin at half the cost.
Newmont Mining ticked up 1.86% after it rejected an $18bn hostile takeover by Canada’s Barrick Gold, the world’s largest miner of the precious metal.
On the macro front, the ISM-NY business conditions index fell for the sixth consecutive month in February, coming in at 61.1, down from the 63.4 recorded in January.
However, according to the Institute for Supply Management, the more-reliable six-month outlook gauge increased for the second month in a row, rising 13.2 points to hit 71.5.
US construction spending turned in a surprise decline in December as investment in both private and public projects dropped, according to the Commerce Department.
Construction spending fell 0.6% at the tail end of 2018 after an unrevised 0.8% increase in November. Economists had pencilled in a 0.2% rise for December.
The weak construction data is expected to impact the government's fourth-quarter GDP estimate published at the end of last week.