NEW YORK (Reuters) – Wall Street’s indexes and bond yields ended down but well above their session lows while oil futures settled higher as investors bet that U.S. President Donald Trump’s threats to raise tariffs on China would not materialize.
Trump tweeted on Sunday that the United States would raise tariffs on $200 billion worth of Chinese goods this week, causing investors to seek safety and flee from risky assets. On Monday, Trump sharply criticized China.
But as Monday’s session wore on, the initial shock from the threats appeared to wear off. U.S. Treasury yields pared some of their declines.
Oil futures reversed course to settle slightly higher after a volatile day as rising tensions between the United States and Iran helped buoy prices. The futures had earlier touched a one-month low due to Trump’s tweets. [O/R]
In stocks, the S&P 500 closed down 0.4% after falling as much as 1.6% during the session.
“Investors are warming up to the idea that its more of a negotiation tactic than it is a petulant child screaming bloody murder,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
Fears about trade war escalation were also calmed somewhat by a statement from China’s foreign ministry on Monday that a Chinese delegation was still preparing to go to United States for trade talks.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 6, 2019. REUTERS/Brendan McDermid
“Right now the contingent from China is still coming. If that changes, then the market narrative and the market reaction might also change,” said Nolte.
The Dow Jones Industrial Average fell 66.47 points, or 0.25%, to 26,438.48, the S&P 500 lost 13.17 points, or 0.45%, to 2,932.47 and the Nasdaq Composite dropped 40.71 points, or 0.5%, to 8,123.29.