Why did the Dow Jones industrial average fall today?
After 19 years covering the stock market for USA TODAY, Adam Shell gives his best advice on how to successfully invest in the market. USA TODAY
NEW YORK – Health care companies led stocks lower on Monday as investors waited for more details on reports that the U.S. and China are moving closer to a deal to resolve their costly trade dispute.
The sell-off was most pronounced in industries that have shown strong gains over the last two months, including health care and technology. Financial stocks also took heavy losses.
The world’s two largest economies have pulled back from an immediate escalation of their damaging trade war since they started negotiating last month. President Donald Trump postponed a deadline for raising tariffs on more Chinese goods, citing progress in a series of talks. Now, media reports say the nations could strike a deal this month.
“The devil is still in the details and those details are still pretty sparse at this point,” said David Lefkowitz, senior Americas equity strategist at UBS Global Wealth Management. “When tariffs might be removed is definitely a key question, and also there’s still some uncertainty about whether or not a deal will be consummated.”
The Standard & Poor's 500 index dropped 10.88 points, or 0.4 percent, to 2,792.81. The index, a benchmark for many mutual funds, is still up 11.4 percent so far this year.
The Dow Jones Industrial Average fell 206.67 points, or 0.8 percent, to 25,819.65. The average was briefly down more than 414 points.
The Nasdaq composite lost 17.79 points, or 0.2 percent, to 7,577.57. The Russell 2000 index of smaller companies gave up 14.20 points, or 0.9 percent, to 1,575.44.
Major indexes in Europe finished mostly higher.
Investors have been hoping for a resolution in the long-running trade dispute between the world’s biggest economies, which centers on China’s technological ambitions. Washington claims Beijing is stealing technology and forcing companies to turn over technology in order to do business.
Tit-for-tat tariffs imposed by both nations have raised prices on a variety of goods. Now, both sides could be close to a deal that would call for China to cut tariffs on U.S. farm, auto and other products, while the U.S. removes most sanctions on imports, according to media reports.
Optimism that a trade pact could be finalized soon gave markets an early boost Monday, but the rally faded as traders sized up mixed U.S. construction spending data.
Health care stocks led the sell-off among companies in the S&P 500. UnitedHealth Group slid 4.1 percent, the biggest loss among the 30 stocks in the Dow.
Technology companies and banks also fell. Salesforce.com sank 3.7 percent and Charles Schwab lost 2.5 percent.
AT&T dropped 2.7 percent on news the telecom company is reorganizing its WarnerMedia unit, which includes HBO and Warner Bros.
Children’s clothing retailer Children’s Place gave investors a dismal forecast after reporting a disappointing fourth quarter. The stock skidded 10.3 percent.
The main issue is competition from dying competitors holding liquidation sales. Rivals Gymboree and Crazy 8 stores have been in the process of shutting down, which means liquidation sales and better deals for shoppers.
“We have never experienced a total liquidation of a direct competitor of the size and proximity of Gymboree,” Children’s Place CEO Jane Elfers said in a prepared statement.
Traders bid up shares in gene therapy developer Nightstar Therapeutics 66.1 percent after biotech giant Biogen offered to buy it for $877 million in cash. Nightstar is developing treatments for rare eye conditions.
Biogen and other large drug developers have been trying to expand their portfolios to include gene therapy and treatments for rare conditions. Those treatments are expensive to develop, but command better prices if they make it to market.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.73 percent from 2.75 percent late Monday.