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The S&P 500 gave up most gains and Dow Industrials turned lower on Tuesday after President Donald Trump’s threat to shut down the government over funding for a border wall undid the boost to markets from optimism over China-U.S. trade talks.

Trump openly fought with Senate Democratic Leader Chuck Schumer and House Democratic Leader Nancy Pelosi at an Oval Office meeting about funding for the wall, throwing into doubt whether a deal was possible ahead of a deadline later this month.

That accelerated the downward trend in equity markets after a strong start to the session on news that U.S. and Chinese officials had discussed a road map for the next stage of trade talks, which Trump called “very productive.”

Traders said the market’s move was another example of the recent swings. On Monday, the S&P bounced off an eight-month low to end higher, with strategists saying trading algorithms kicked in with buy signals at the lows of the day.

“We’re in a period of a lot of intra-day volatility where market participants are trying to figure out where things should be properly valued and you’re going to get a lot of back and forth,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

Brown said the outlook for next year was being clouded by “period of extraordinary uncertainty,” leaving investors trying to balance stock valuations with headlines such as political news in Washington, Brexit, interest rates and trade.

“The whole idea of a risk-on is not generally going to follow through.”

Adding to nerves was a report that some lawmakers in British Prime Minister Theresa May’s Conservative Party believed they had sufficient numbers to mount a no-confidence vote to her leadership.

The losses were led by the S&P financial sector’s, 0.87-per-cent drop. The sector was up earlier as were the trade-sensitive industrials.

Industrials were down 0.57 per cent, also hit by a Washington Post report saying Washington will condemn China over hacking and economic espionage.

Technology stocks, which helped power the market’s reversal Monday, were up 0.10 per cent, having given up a large chunk of their gains.

The Dow Jones Industrial Average was down 41.78 points, or 0.17 per cent, at 24,381.48. The S&P 500 was up 2.59 points, or 0.10 per cent, at 2,640.31 and the Nasdaq was up 22.15 points, or 0.32 per cent, at 7,042.67.

The defensive utilities, real estate and consumer staples moved higher to lead the sectoral gainers.

Dow component Pfizer Inc fell 1.31 per cent after a JP Morgan downgrade. Apple Inc, off 0.74 per cent, weighed the most on the S&P and the Nasdaq.

Canada’s main stock index gained on Tuesday in a broad-based rally, despite a dip in energy stocks.

At 1:36 p.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 20.68 points, or 0.14 per cent, at 14,707.860 It reached a high of 14,957.81 early in the trading session.

After climbing almost 2 per cent early, the energy sector sat down 1.2 per cent. Suncor Energy Inc. dipped 1.7 per cent, while Canadian Natural Resources Ltd. fell 2.3 per cent.

Marijuana producers led a 1.6-per-cent jump in health care stocks. Aphria Inc. rose 5.4 per cent, while Aurora Cannabis Inc. and Canopy Growth Corp. sat up 2.9 per cent and 2.1 per cent, respectively.

Reuters

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/05/24 4:00pm EDT.

SymbolName% changeLast
GM-N
General Motors Company
-0.74%42.77
IMO-T
Imperial Oil
+2.31%96.56
SU-T
Suncor Energy Inc
+0.47%55.54
WEED-T
Canopy Growth Corp
-8.41%11.55
ACB-T
Aurora Cannabis Inc
-5.6%8.6
F-N
Ford Motor Company
-0.68%11.6

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