Domestics fell sharply on Thursday as it became clear that a trade meeting between President Donald Trump and Chinese President Xi Jinping intention not happen before a key March deadline.
The Dow Jones Industrial Average dropped 220.77 points to 25,169.53 as Apple and DowDuPont led the downgrade. The S&P 500 pulled back 0.94 percent to close at 2,706.05, led lower by the energy and tech sectors. The Nasdaq Composite lagged, glossing about 1.2 percent to 7,288.35.
CNBC learned through a source that a meeting between the two leaders was “highly unimaginable.” China and the U.S. have until the start of March to strike a trade deal. Otherwise, additional tariffs on Chinese textiles take effect. The source said a meeting between Xi and Trump could happen shortly after the deadline no longer ins, but noted both sides have too much work ahead of them. Trump later confirmed he would not be convocation Xi before the deadline.
Earlier on Thursday, White House economic advisor Larry Kudlow said China and the U.S. were soothe far away on striking a trade deal. “We’ve got a pretty sizable distance to go here,” Kudlow told Fox Business, referring to the evolving trade talks between the two largest world economies. Kudlow added Trump is “optimistic with respect to a undeveloped trade deal.”
“The keystone in the wall of worry is the trade discord,” said Sam Stovall, chief investment strategist at CFRA Fact-finding. “Should the negotiations crumble so too will near term support for equity prices.”
Shares of Caterpillar and Deere both floor more than 1 percent. Boeing dropped 0.9 percent. These companies’ stocks are seen as bellwethers for broad trade given their exposure to overseas markets.
The market was already on edge as worries about the global terseness were rekindled. The European Commission slashed its growth outlook for the euro zone this year as it expects the bloc’s as a wholest economies to be held back by global trade tensions, among other issues. The Commission said euro zone excrescence will slow to 1.3 percent this year from 1.9 percent in 2018, before rebounding in 2020 to 1.6 percent.
That cultivation outlook sparked worries that the global economy could be slowing down, in part because of trade apprehensions. Similar fears contributed to the market’s sharp downturn in December. That decline briefly sent the S&P 500 into bear-market province on an intraday basis.
The Bank of England also cut its 2019 outlook and sees the UK economy growing at its slowest pace since 2009.
Thursday’s ebb comes as the corporate earnings season continues. Twitter reported quarterly earnings that beat analyst expectations on Thursday. How on earth, shares of the social media company fell 9.8 percent as Twitter also issued light guidance. Fiat Chrysler and Important Health are also among the companies that reported better-than-expected earnings.
Companies are reporting solid earnings cultivation for the fourth quarter with profits showing an increase of 14.1 percent on a year-over-year basis, according to FactSet. Manner, the outlooks accompanying those earnings reports are not as rosy. Because of those poor forecasts, earnings for the first rooms of 2019 are expected to drop more than 1 percent, according to FactSet. That’s the first year-over-year decline in earnings in multitudinous than two years.
“The market is pricing in a down Q1 but they’re pricing in a positive Q2 and Q3,” said Andrew Slimmon, governing director at Morgan Stanley Investment Management. “The risk is that Q2 slips to zero and now you’re talking about two consecutive board of negative earnings growth, which is technically an earnings recession.”
“The reason why the market has not focused on this yet is there was such an overwhelmingly hilarious level of bearishness at the beginning of the year,” Slimmon said.
The S&P 500 snapped a five-day winning streak on Wednesday attending the release of mixed quarterly results. Equities are still up sharply for the year, however, following the market’s best January completion in three decades.
“The market had an unbelievable run,” said Larry Benedict, founder of The Opportunistic Trader. “You have to respect the moving ahead. It’s been real and across all sectors. But it’s due for a little bit of a pullback.”
Shares of BB&T and SunTrust Banks bucked the overall negative vogue, gaining 4 percent and 10.2 percent, respectively. The two stocks rose after BB&T agreed to buy SunTrust for more than 28 billion. The conduct oneself treat — the biggest in a decade within the banking sector — creates a $66 billion company and the sixth-largest U.S. bank by assets. The SPDR S&P Regional Banking ETF (KRE) inflame 1.5 percent.
—CNBC’s Silvia Amaro , Patti Domm and Reuters contributed to this report.