US Stocks Fall as Investors Weigh Trade Negotiations, Earnings


U.S. stocks slumped Tuesday as investors weighed global trade negotiations, central bank moves and the latest round of corporate earnings results.

The Dow Jones Industrial Average fell 239 points, or 1%, to 23924. The S&P 500 dropped 0.4%, and the technology-heavy Nasdaq Composite slipped less than 0.1%.

Shares of Pfizer dragged on the Dow, falling 3.9%, after the pharmaceutical giant reported revenue that fell short of estimates. McDonald’s wasn’t far behind, dropping 2.5% and giving back some of the prior session’s gains, after reporting on Monday global sales and profit growth in the first quarter that was overshadowed by a decline in U.S. customer visits.

In the broader S&P 500, shares of energy companies fell 1.3%, alongside crude oil, which declined 1.8% to $67.34 a barrel. Nine of the index’s 11 sectors were in the red.

Tapestry, known for the designer brand Coach, was another big mover, declining 13% after reporting weakness at its Stuart Weitzman shoe brand.

Apple and T-Mobile are both set to report results after the closing bell.

U.S. stocks eked out small gains in April on the back of strong corporate earnings after being rocked by a bout of volatility earlier in the year. Investors worried that higher inflation could lead central banks to tighten monetary policy faster than anticipated, while concerns about global trade frictions raised alarms about the global economy.

Late Monday, President

Donald Trump

gave the European Union and some nations outside the bloc an additional month to negotiate deals that would exempt them from U.S. steel and aluminum tariffs. The White House said broad tariffs of 25% on steel and 10% on aluminum—already in effect against China, Russia, Japan and others—won’t take effect for the EU on Tuesday as previously planned.

“Trade issues and protectionist rhetoric aren’t constructive for markets as they could impact growth. But for now it doesn’t seem like it will boil over,” said

Eric Stein,

co-director of global income at Boston-based Eaton Vance.

Data released Monday showed that year-over-year inflation hit the Fed’s 2% target for the first time in over a year in March, a sign of strengthening U.S. inflation pressures that could encourage the central bank to continue lifting interest rates this year.

Traders were also looking ahead to a Federal Reserve meeting, which concludes Wednesday, where the U.S. central bank isn’t expected to announce any major policy moves.

“Markets will be looking for fresh clues about the pace of monetary policy tightening,” analysts at Rabobank wrote in a note to clients.

The dollar extended its gains after registering in April its largest one-month advance since late 2016. The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was up 0.6%.

The 10-year U.S. Treasury yield rose to 2.974% from 2.936%. Yields move inversely to prices.

The Stoxx Europe 600 slipped less than 0.1%. Many markets in Europe and Asia were closed for a holiday.

Stocks in Asia turned higher, although most markets in the region were closed for the Labor Day holiday. In Japan, the Nikkei Stock Average reversed modest early declines to end up 0.2%.

Write to Georgi Kantchev at georgi.kantchev@wsj.com



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