U.S. stocks sold off sharply Tuesday after President Donald Trump suggested he was in no hurry to clinch a trade deal with China.
Here’s where the markets settled at the end of regular equity trading Tuesday:
S&P 500 (^GSPC): -0.66%, or 20.67 points
Dow (^DJI): -1.01%, or 280.23 points
Nasdaq (^IXIC): -0.55%, or 47.34 points
10-year Treasury yield (^TNX): -12 bps to 1.716%
Gold (GC=F): +0.95% to $1,483.20 per ounce
Trump told reporters in London that he had “no deadline” to come to a trade agreement with China, when asked whether he would want to reach a deal by the end of the year, according to multiple reports.
“In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right,” Trump said, according to outlets including Reuters.
The three major domestic stock indices sold off and Treasury yields fell following these comments early Tuesday morning, which hinted that a resolution to well over a year’s worth of tensions with China could drag on until at least through 2020 general elections in November. Each of the S&P 500, Dow and Nasdaq paced fell for a third straight session. At the lows of the session, the Dow was lower by more than 450 points.
Every component in the 30-stock Dow fell around market open, and only five names climbed into the green by the end of regular trading. The VIX (^VIX), or so-called “fear gauge,” climbed as much as 20.7% to 17.99, reaching the highest level since October 9.
“Major indexes have been used to seeing more green than red thus far in the holiday season. That said, trade has been a consistent market mover and with presidential rhetoric adding significantly more friction to trade tensions, we’re seeing this translate into more apprehension in the markets,” Mike Loewengart, vice president of investment strategy at E-Trade Financial, wrote in an email.
“Market watchers might assume that from the latest remarks, hopes for a resolution are essentially dashed in the near term. With 2020 elections around the corner, we could start to see more stalemates in the beltway,” he added.
Trump’s comments come a day after Commerce Secretary Wilbur Ross told Fox Business there was a “logical deadline” of December 15 for a trade deal, given that that marks the date that tariffs on an additional $156 billion worth of Chinese imports are set to take effect. He had also said that if a deal didn’t materialize by then, “the president has made quite clear he’ll put the tariffs in,” even as Beijing has sought a roll-back of new and existing levies to clear the way for a trade deal.
The Trump administration was set to go ahead with the Dec. 15 tariffs as of Tuesday, Fox Business reported, citing unidentified trade sources.
In recent days, the Trump administration has been ratcheting up rhetoric around new tariff impositions, not only on goods from China but also on those from other trade partners with the U.S. Trump on Monday tweeted that he was reimposing tariffs on steel and aluminum from Brazil and Argentina, for what he considered to be unfair “massive devaluation of their currencies.”
Later Monday, the Office of the U.S. Trade Representative said it determined France’s digital service tax “discriminates against U.S. companies” including Google, Apple, Facebook and Amazon, and threatened to impose tariffs of about $2.4 billion worth of French goods. France’s finance minister told a French radio station Tuesday that the EU would be ready to retaliate if the Trump administration makes good on these tariffs, which could be imposed at a rate of as much as 100% on some French products.
France’s digital service tax comprises a 3% levy on companies with revenue of more than 750 million euros (or $850 million) globally, and with more than 25 million euros (or $27.86 million) in revenue coming from France. The levy is retroactive to January 2019.
The USTR said it is also mulling investigating whether digital taxes in Austria, Italy and Turkey target U.S. companies in a way considered unfair by the administration.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: