Market Snapshot: Stocks close mostly lower as S&P 500 notches fourth straight day of losses

  • Micron’s stock popped about 13%, leading gains for chip makers
  • Mnuchin told CNBC ‘we were about 90% of the way there’ on China trade deal
  • Health care, utilities stocks fell about 1.1%, leading markets lower.

Stocks closed mostly lower Wednesday, as investors grew increasingly skeptical that a U.S.-China trade deal is in the offing, though technology shares were supported by optimism related to Micron Technology’s better-than expected guidance.

How did the major benchmarks fare?

The Dow Jones Industrial Average DJIA, -0.04% fell 11.4 points, or less than 0.1%, to 26,536.82, but had been as high as 26,669, while the S&P 500 SPX, -0.12%  fell 3.6 points, or 0.1%, to 2,913.78. The Nasdaq Composite Index COMP, +0.32% rose 25.2 points, or about 0.3%, to 7,909.97.

What drove the market?

Comments from U.S. Treasury Secretary Steven Mnuchin suggesting that a Sino-American trade resolution had been near in an earlier round of talks, provided an early lift to markets. “We were about 90% of the way there (with a deal) and I think there’s a path to complete this,” he told the financial network in Bahrain.

The U.S. Treasury Secretary said he was “hopeful” that a deal could be struck as the market awaits a sideline conversation between President Donald Trump and Chinese President Xi Jinping at the Group of 20 gathering in Osaka, Japan, which kicks off on Friday.

Optimism over the prospects for a trade war detente tempered during the session, however.

“I am not optimistic of anything of significance to be achieved for the meetings in Japan this week,” said Mariann Montagne, a portfolio manager at Gradient Investments, in a telephone interview.

“Mnuchin or members of his team have used that phrase several times over the past several months,” she told MarketWatch. “I think people are getting too excited.”

In April, Mnuchin said U.S.-China trade talks were in the “final laps.

Separately, President Trump, appearing on Fox Business on Wednesday said that he was happy to collect China tariffs if talks broke down.

Concerns about escalating trade tensions between China and the U.S., the world’s largest economies, have fed a sense of rising uncertainty about the health of the global economy, at least partly contributing to central banks across the world signaling a willingness to reinstitute a fresh wave of economic stimulus.

“Certainly, when we came in pre-open, futures were higher on the Mnuchin comments,” said Sahak Manuelian, an equities trader at Wedbush Securities, while noting that those gains were short lived.

On Tuesday, equity markets suffered one of the worst declines in about a month, led by a selloff in trade-sensitive technology shares.

“It’s a bit of wavering ahead of the G-20,” said Jeff Kleintop, chief global investment strategist at Charles Schwab, in an interview. “The markets have priced in a delay to the implementation of the next round of tariffs, through next month, on $300 billion of Chinese goods.”

But Kleintop also cautioned that stocks, near all-time highs, may be seeing an overabundance of confidence.

“If it’s trade or another factor, the market does feel vulnerable to a setback,” Kleintop said.

Tuesday’s slump in stocks came after Federal Reserve Chairman Jerome Powell, speaking at the Council on Foreign Relations in New York, signaled that an interest-rate cut in July isn’t a done deal, and St. Louis Fed President James Bullard said he isn’t advocating for an aggressive cut of 50 basis point in federal-funds rates when the Fed meets next month.

Read: Fed’s Bullard says he is not in favor of half point rate cut in July

Check out: Powell says the Fed is ‘grappling’ with whether to cut interest rates

U.S. economic data published Wednesday was again weak, with durable-goods orders for May dropping 1.3%, weighed down by Boeing Co.’s BA, +1.52% woes from its grounded 737 MAX jets.

Check out: Durable-goods orders drop 1.3% in May, but business investment picks up in reassuring sign

A separate report on international trade in goods also showed the U.S. trade deficit climbed 5.1% for the same month, which was wider than expected.

Read: U.S. trade deficit in goods widens 5.1% to $74.5 billion in May

Which stocks were in focus?

Shares of Apple Inc. AAPL, +2.16% were in focus after the iPhone maker and tech giant acquired autonomous-driving startup Drive.ai, according to multiple reports. Apple confirmed the deal to both Axios and the San Francisco Chronicle. Shares of Apple rose 2.2% on Wednesday.

Micron Technology Inc. shares MU, +13.34% rose 13.3% on the day.

That was good news for other semiconductor companies. Shares of Advanced Mico Devices AMD, +3.67%   climbed 3.7%; while Nvidia Corp. NVD, +3.72%  stock gained 5.1% and shares of exchange-traded semiconductor fund iShares PHLX Semiconductor ETF SOXX, +3.23% climbed 3.2%.

Shares of Boeing BA, +1.52%  advanced 1.5% on Wednesday.

Consumer-goods giant General Mills GIS, -4.45%  shares tumbled 4.5%, a day after it reported disappointing sales for its fiscal fourth-quarter.

Shares of retailer Big Lots BIG, +2.63%  gained 2.6% after the retailer said it would appoint former Abercrombie & Fitch veteran Jonathan Ramsden as chief financial officer in August.

FedEx Corp FDX, +2.53%  shares bumped up 2.5% a day after it beat earnings estimates.

How did other markets trade?

The yield on the 10-year U.S. Treasury note rose less than a basis point to 2.045%.

Asian markets closed mostly lower Wednesday, with Japan’s Nikkei 225 NIK, -0.51%   falling 0.5%, while China’s Shanghai Composite index SHCOMP, -0.19%   fell 0.2%. Hong Kong’s Hang Seng HSI, +0.13%   index rose 0.1%. European stocks also closed on a down note, with the Stoxx Europe 600 losing 0.3%.

In commodities markets, the price of crude oil CLQ19, +2.40%   rose 2.4%, while gold prices GCN19, -0.42%   fell 0.4%. The U.S. dollar DXY, +0.08%   edged roughly 0.1% higher, relative to its peers.

Mark DeCambre contributed to this report.

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