U.S. stocks dropped on Thursday after President Donald Trump canceled a planned summit with North Korean leader Kim Jong Un, while a slide in oil prices and bank stocks also weighed as investors grappled with fresh U.S. protectionist plans.
Trump said he canceled a June 12 summit “based on the tremendous anger and open hostility” in Kim’s recent statement.
The move came after North Korean media reported earlier that the country had blown up tunnels at its nuclear test site, which had raised the possibility of the summit.
Trump on Wednesday ordered a national security probe into car and truck imports that could lead to new tariffs, with China calling the move an “abuse” of the clauses and saying it would defend its interests.
The decision added to jitters over the prospects of trade negotiations with China, reignited after Trump called for “a different structure” to any trade deal.
“The markets are adjusting now with lots of uncertainties, with China, North Korea, (and the prospect of) a trade war that could spill over to other parts of the economy and the world,” said Adam Sarhan, chief executive of 50 Park Investments in New York.
At 10:03 a.m. ET, the Dow Jones Industrial Average was down 129.77 points, or 0.52 per cent, at 24,757.04, the S&P 500 was down 13.55 points, or 0.50 per cent, at 2,719.74 and the Nasdaq Composite was down 31.17 points, or 0.42 per cent, at 7,394.79.
Nine of the 11 major S&P sectors were in the red, with the technology sector’s 0.5-per-cent decline weighing the most. The decline accelerated after the North Korea-U.S. summit cancellation.
Shares of European and Asian automakers skidded on the possibility of import tariffs, while U.S. automakers gained.
Ford was up 1.3 per cent and General Motors gained 0.8 per cent. U.S.-listed shares of Fiat fell 2.3 per cent, while those of Ferrari dipped 0.6 per cent.
Energy stocks declined as oil prices recorded their largest one-day drop in two weeks on rising expectations that OPEC could wind down an output deal that has been in place since the start of 2017 due to concerns about supplies from Venezuela and Iran.
Financials stocks dropped after the minutes from the Federal Reserve’s latest meeting tempered expectations of faster interest rate hikes.
Best Buy Co tumbled 6.3 per cent as investors focused on slowing online sales growth over the better-than-expected quarterly comparable sales.
Canada’s main index opened higher on Thursday, as precious metal miners gained on rising gold prices and financial stocks were supported by Toronto-Dominion Bank.
The Toronto Stock Exchange’s S&P/TSX Composite Index was up 8.81 points, or 0.05 per cent, at 16,142.61.
TD was up 1.8 per cent in early trading after reporting second-quarter earnings which were ahead of market expectations, benefiting from a strong performance at its domestic retail business.
The Canadian dollar weakened against its U.S. counterpart on Thursday as oil prices fell and investors weighed the potential imposition of U.S. tariffs on car imports.
The Trump administration has launched a national security investigation into car and truck imports that could lead to new U.S. tariffs, similar to those imposed on imported steel and aluminum in March.
The investigation comes as the United States renegotiates the North American Free Trade Agreement with Canada and Mexico to return more auto production to the United States.
Canada is a major exporter of autos to the United States so its economy could be hurt by U.S. auto tariffs or failure to reach a deal on NAFTA.
Oil is also one of Canada’s major exports. Its price fell by the most in two weeks as expectations rose that OPEC will end an output deal that has been in place since the start of 2017.
The Canadian dollar was trading 0.3 per cent lower at $1.2880 to the greenback, or 77.64 U.S. cents.
The currency traded in a range of $1.2829 to $1.2898. On Wednesday, it touched its weakest in more than one week at $1.2916.