US open: Stocks dip amid negative headlines on trade, dollar lower as well
US stocks were edging slightly lower on Monday as trade tensions resurfaced after China called off planned trade talks with Washington over the weekend and as fresh tariffs on Chinese imports kick in.
To take note of as well, US and European Union officials were set to meet to talk about trade over the coming week.
Against that backdrop, as of 1455 BST, the Dow Jones Industrials Average was down by 0.43% or 116.13 points at 26,627.03, the S&P 500 meanwhile was 0.31% or 9.32 points lower to 2,920.46 and the Nasdaq Composite had yielded 0.29% or 23.21 points to change hands at 7,963.99.
In parallel, the US dollar spot index was down by 0.35% at 93.8890, while the yield on the benchmark 10-year US Treasury note was up by one basis point to 3.08%.
Joshua Mahony, market analyst at IG, said: "While markets no doubt believe that the current trade concerns are unlikely to be the beginning of a long-term phenomenon, the latest breakdown in talks highlights the possibility that this will rumble on for some time yet. With the US midterms ahead, Trump is unlikely to give any concessions at the risk of seeming less effective, thus lessening any hopes of a breakthrough in the coming months."
A 10% levy on $200bn worth of Chinese goods was due to come into effect at noontime on Monday. Meanwhile, China has retaliated to this US levy by announcing tariffs on an additional $60bn of imports from the US.
Nevertheless, Mislav Matejka at JP Morgan was constructive on the outlook for stocks, predicting higher Treasury yields, alongside a stable to weaker US dollar, which he said was a "reflationary" combination.
"The combination of rising bond yields, and at the same time weaker/stable USD, is reflationary, and it supports our bullish view on the equity market," Matejka said in a research note sent to clients.
"Over the last few days market internals have clearly improved, with Cyclicals outperforming, which is consistent with the above setup. Mining, Autos, Semiconductors and Capital Goods are our preferred plays in this backdrop, and we expect Defensives – Staples, Pharma and others – to fade away, post their summer bounce."
Oil stocks could be a bright spot as Brent crude hit its highest level since 2014, climbing above $80 a barrel after OPEC and its allies refrained from agreeing a production increase over the weekend.
On Friday, some traders had been speculating that the Organisation of Petroleum Exporting Countries might decide on a 500,000 barrel a day increase in their combined output when they next met.
In corporate news, Michael Kors shares were sharply lower following reports it's on the cusp of agreeing a $2bn deal to buy Italian fashion house Versace.
Elsewhere, Comcast was also on the back foot, with stock in the media giant down by 7.18% after outbidding 21st Century Fox over the weekend for London-listed broadcaster Sky.
A proposal from its chief executive officer to sell assets in order to pay down its debt also sent stock in Sears lower.
Shares in Micron Technology were higher even after analysts at Needham cut their target price on the chipmaker's shares from $100 to $80, albeit while reiterating their 'string buy' recommendation.
Barrick Gold was also wanted after inking a deal to purchase rival Randgold Resources for $6.0bn.
On the data front, the three-month moving average for the Chicago Fed's national activity index for August printed at +0.24, which was up from a reading of +0.02 for the month before, boosted by gains in indicators linked to production and for sales, orders and inventories.
Still ahead, the Dallas Fed manufacturing business index for September was set for release at 1530 BST.