Stocks Slip as US-China Trade Talks End; Macy's Nosedives
NEW YORK (AP) — A rally in global stock markets faded Thursday after U.S. and Chinese officials wrapped up three days of trade talks in Beijing without any significant breakthrough. Retailers sank after Macy's and Kohl's said sales over the holidays were worse than expected, and airlines slumped after American gave a disappointing revenue forecast.
The losses threaten to end a four-day winning streak for U.S. indexes. Oil prices also turned lower after an eight-day string of gains.
KEEPING SCORE: The S&P 500 index gave up 17 points, or 0.7 percent, to 2,567 as of 10 a.m. Eastern time. The Dow Jones Industrial Average lost 125 points, or 0.5 percent, to 23,753. The Nasdaq composite dropped 63 points, or 0.9 percent, to 6,893. The Russell 2000 index of smaller-company stocks fell 12 points, or 0.9 percent, to 1,426.
BLACK EYE-DAY: Macy's said holiday sales slowed in the middle of December and the department store cut its annual profit and sales forecasts. Its stock plunged 17.8 percent to $26.07 in heavy trading. Kohl's also reported weaker sales growth and it fell 9.1 percent to $63.51.
Macy's announcement came as a surprise because investor expectations for the holiday season have been high. Unemployment is the lowest it's been in decades, wages are rising and consumer confidence is high, while gas prices dropped late last year. But shoppers may have been less willing to splurge because the stock market fell dramatically in December, and shortly afterward the federal government went into a partial shutdown that is still ongoing.
Victoria's Secret maker L Brands fell 7.9 percent to $25.99 and Capri Holdings, the parent company of Michael Kors and Versace, lost 4.6 percent to $39.94 while Gap shed 4.3 percent to $24.95. Amazon lost 1.7 percent to$1,630.
STUCK ON THE RUNWAY: Airlines skidded after American said its fourth-quarter revenue growth at the low end of its projections. Delta gave a similarly disappointing forecast a week ago. American fell 9.9 percent to $30.10 while Delta lost 3.6 percent to $46.74 and United dropped 6 percent to $78.69.
U.S.-CHINA TALKS: Stock markets have jumped over the last two weeks as investors grew more hopeful that the U.S. and China will resolve the trade tensions that have been brewing over the past year. The just-concluded talks in Beijing helped the U.S. market rally for four days in a row, its longest streak since mid-September. But as those talks ended, it's not clear what the next steps will be or when they will talk next.
The U.S. Trade Representative said topics at the meeting included China's pledge to buy more energy and agricultural products and manufactured goods from the U.S.
But that's a relatively minor area of disagreement. The U.S. wants China to change its technology policy to reduce cyber theft of trade secrets as well as more access to the Chinese market for non-Chinese companies and increased protection for foreign patents and copyrights. The U.S. Trade Representative gave no hint of progress on those issues.
BONDS: Bond prices rose. The yield on the 2-year Treasury note fell to 2.53 percent from 2.55 percent. The yield on the longer-term Treasury note fell to 2.70 percent from 2.72 percent.
ENERGY: Oil prices fell back after hitting their highest levels in almost a month. U.S. crude fell 0.9 percent to $51.87 a barrel in New York and Brent crude fell 0.9 percent to $60.87 a barrel in London.
OVERSEAS: Germany's DAX dipped 0.3 percent while France's CAC 40 was 0.6 percent lower. Britain's FTSE 100 slipped 0.1 percent.
Japan's Nikkei 225 index, which gained more than 1 percent on Wednesday, fell 1.3 percent and the Kospi in South Korea dropped 0.1 percent. Hong Kong's Hang Seng recovered from early losses, adding 0.2 percent.
By AP reporter Marley Jay