U.S. Stocks Struggle for Direction as China Lowers Auto Tariffs; Cryptos Teeter on New Yearly Lows
U.S. stocks struggled for direction on Tuesday, as markets digested the latest round of trade talks between the United States and China. Cryptocurrencies were back on the defensive and dangerously close to setting new lows for the year.
After swinging between gains and losses for much of the day, the S&P 500 Index settled virtually flat at 2,636.78. Financials companies were the biggest laggards, falling 1% on average. Gains in consumer staples and health care helped to offset the loss.
The Dow Jones Industrial Average fell 53.02 points, or 0.2%, to close at 24,370.04. The blue-chip index was down triple-digits earlier.
Meanwhile, the technology-focused Nasdaq Composite Index managed to climb 0.2% to settle at 7,031.83.
Wall Street finished mostly higher on Monday after the major indexes clawed back from brutal intraday losses. Markets are coming off one of their worst weeks of the year, highlighted by a nearly 6% drop in the S&P 500.
Initial trade talks between the United States and China have yielded positive results after Beijing confirmed it will reduce tariffs on American automobiles to 15% from 40%. The news suggests that both sides are working amicably on a new free trade agreement following a bitter feud that threatened to throw global economic growth off course.
According to The Wall Street Journal, Chinese Vice Premier Liu He delivered the news to Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer during a phone call Monday evening. The tariffs were implemented initially in response to escalating duties on Chinese imports by the Trump administration. The rift between the U.S. and China has cooled following face-to-face meetings between presidents Trump and Xi Jinping on the sidelines of the G20 summit earlier this month. At the time, both sides committed to resolving their trade dispute within 90 days.
The trade truce also includes considerations for upending certain elements of the Made in China 2025 plan, which is intended to boost Chinese companies across various industries including artificial intelligence.
Cryptos at Risk
The cryptocurrency market is teetering on the edge of new lows Tuesday, leaving very little doubt that another round of selling was in play. As Hacked recently reported, Stellar (XLM/USD), Litecoin (LTC/USD), Ethereum (ETH/USD) and XRP (XRP/USD) all face considerable risk of setting new lows in relatively short order.
All the majors were down over the past 24 hours, with the notable exception being Tether. The stablecoin has benefited from the recent downturn and is currently trading above parity with the greenback. Tether is now the fifth-larges crypto by market cap with a total value of $1.9 billion. Bitcoin cash has fallen back down to sixth spot following a 35% weekly plunge.
Bitcoin continues to exert significant influence on other cryptocurrencies, with its share of the market growing to 55%. The leading digital currency has posted a series of lower highs and lower lows, a recipe for disaster in the short-run. Technical traders should keep a close watch of the $3,200 threshold as it could be the next to fall amid the relentless downtrend.
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.
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