US stocks fall on earnings, trade talk; Treasuries gain

Bloomberg

US stocks fell a second day amid a mixed bag of corporate results and growing speculation a trade deal with China remains elusive. Treasuries edged higher as the Federal Reserve began deliberating on the path for interest rates.
The S&P 500 Index slumped, with overnight trading reaching lows after President Donald Trump criticised China just as his negotiators start talks in Shanghai. In earnings news, retailer Under Armour slumped after warning about weak sales, Procter & Gamble and Merck gained on strong results.
Tech shares led losses as Apple Inc dipped ahead of its quarterly report after the close.
The 10-year Treasury yield traded around 2.06 percent as investors awaited the Fed’s anticipated rate cut on Wednesday. The dollar rose, and the euro was little changed as the latest economic data out of the region added to an outlook. The pound continued its decline amid concerns about a no-deal Brexit.
Trump redirected investor angst towards tariffs on China, lashing out at the nation for continuing to “rip off” the US.
The trade dispute ranks high among the reasons global growth has been flagging enough to prompt the Fed to consider rate cuts. Stocks rose to records just as corporate profits came in higher than expected and data showed steady economic growth.
“Trade is the big question mark,” Doug Peta, chief US investment strategist at BCA, said in an interview at Bloomberg’s New York headquarters.
“If the tensions were to worsen, if trade were to slow even more, I’d think that that sharp manufacturing slowdown could easily become a manufacturing recession and if it were to spread to the services part of the global economy then it could easily induce a global recession.”
Investors have a lot to digest this week with trade talks, the Federal Reserve, corporate earnings and US jobs data all on their plates. Chinese and American negotiators are kicking off two days of talks in Shanghai on Tuesday, and on Wednesday the Fed is widely anticipated to cut rates. Chairman Jerome Powell’s post-meeting press conference will be scoured for clues on the policy path as signs of slowing growth put pressure on central banks around the world.
Meanwhile, as corporate reporting season rolls on in the US, Europe and Asia, traders will be looking for evidence of a slowdown. The latest economic data provide food for thought, showing Japan’s factory output fell more than expected in June and the French economy slowed in the second quarter. The Bank of England policy decision is due on Thursday. The US July jobs report is due on Friday.
The S&P 500 Index fell 0.3 percent in New York. The Stoxx Europe 600 Index decreased 1.4 percent to the lowest in more than a month. The UK’s FTSE 100 Index declined 0.3 percent. The MSCI Asia Pacific Index advanced 0.2 percent.
The Bloomberg Dollar Spot Index rose 0.1 percent. The euro was little changed at $1.1146. The British pound decreased
0.4 percent to $1.2171, the weakest in more than two years. The Japanese yen increased 0.2 percent to 108.56 per dollar.
The yield on 10-year Treasuries fell one basis point to 2.06%.