Market Update: Stock-Rally Falters with U.S.-China Trade Talks in Focus

U.S. stocks declined in the final hour of trading Tuesday, with the S&P 500 Index giving up earlier gains as investors evaluated ongoing developments in U.S.-China trade negotiations.

Stocks Finish Lower

After trading in positive territory throughout the day, the S&P 500 Index reversed course to settle down 0.3% at 2,724.44. Losses were concentrated in seven of 11 primary sectors, with energy and industrials registering the biggest declines.

The technology-heavy Nasdaq Composite Index also gave up gains, finishing down 0.2% at 7,376.46.

The Dow Jones Industrial Average hastened its decline in the final hour, falling 178.88 points, or 0.7%, to 24,834.41. The blue-chip index settled above 25,000 on Monday for the first time since March.

The CBOE Volatility Index, commonly known as the VIX, hovered within a narrow range on Tuesday and eventually settled at 13.22. That’s about seven points shy of the historic average, which signals prevailing calm on Wall Street.

U.S.-China Trade Tensions Ease

China’s Finance Ministry announced Tuesday it will lower auto tariffs to 15% from as high as 25% while cutting duties on parts to as low as 6%. The tariff reduction was announced three days after a White House memo confirmed China’s willingness to purchase more U.S. goods and services.

Treasury Secretary Steve Mnuchin has confirmed that trade talks between the U.S. and China were progressing favorably, quelling fears about a looming trade war.

The Trump administration has called on China to up its purchase of U.S. goods by a significant amount to reduce Washington’s trade deficit with the country, which swelled to $375 billion last year.  President Trump cranked up the pressure on Beijing earlier this year by announcing $50 billion in tariffs on Chinese goods.

Cryptocurrencies Rangebound as Trade Volumes Drop

Digital currency prices drifted lower on Tuesday as overall trade volumes continued to decline. At the time of writing, total transactions were valued at $15.2 billion over the past 24 hours. That represents a decline of about $6 billion from last week.

The combined value of all cryptocurrencies hovered between $368 billion and $383 billion on Tuesday. Prices were last seen trading at the lower end of that range.

The majors were down across the board, booking losses between 2% and 6.2%. Bitcoin prices briefly fell below $8,200 but later recovered near $8,221. Bitcoin cash was the biggest decline in the top ten, falling more than 6% to $1,162.

Cryptocurrencies continue to trade without direction following last week’s Consensus blockchain summit. Regulatory uncertainty and slower than expected institutional adoption have been cited as reasons for the slow trading environment.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi