U.S. stocks fell on Thursday after President Donald Trump canceled a planned historic summit with North Korean leader Kim Jong Un and threatened tariffs on auto imports while trade tensions with China simmered.
Trump canceled the June 12 meeting “based on the tremendous anger and open hostility” in Kim’s recent statement, even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site.
The market was already lower earlier, due to a slide in oil prices and worries that Trump ordering a national security probe into car and truck imports could further complicate trade negotiations with China.
The probe, ordered on Wednesday, could lead to new tariffs and China called the move an “abuse” of the national security clauses and said it would defend its interests.
Market participants said the sharp drop after the summit was canceled was a knee-jerk reaction.
“What we are seeing is a little more broad. We are at the mercy of the (Trump) administration, not just on North Korea but on trade with the auto tariffs,” said Liz Ann Sonders, chief investment strategist at Charles Schwab, New York.
“Sure, the summit was seen as a positive and it being called off is, I suppose, a negative. But I think the weakness in the market is broader.”
At 12:19 a.m. ET, the Dow Jones Industrial Average was down 133.75 points, or 0.54 percent, at 24,753.06, the S&P 500 was down 9.76 points, or 0.36 percent, at 2,723.53 and the Nasdaq Composite was down 11.92 points, or 0.16 percent, at 7,414.04.
Eight of the 11 major S&P sectors were in the red, with the energy sector down 1.53 percent.
Oil prices recorded their largest one-day drop in two weeks, with expectations building that OPEC could wind down an output deal due to concerns about supplies from Venezuela and Iran. [O/R]
The financial sector dropped 0.8 percent after the minutes from the Federal Reserve’s latest meeting tempered expectations of faster interest rate hikes.
Ford and General Motors gained on the possibility of tariffs on European and Asian car imports. U.S.-listed shares of Fiat fell 1.6 percent.
Best Buy Co tumbled 7.68 percent after the consumer electronics retailer reported a slowdown in quarterly online sales and did not update its full-year outlook.
Declining issues outnumbered advancers for a 1.17-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.24-to-1 ratio on the Nasdaq.
The S&P index recorded 16 new 52-week highs and one new low, while the Nasdaq recorded 77 new highs and 36 new lows.