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Market Snapshot: Stocks remain under pressure on U.S. – China tensions

U.S. stocks were lower mid-morning Wednesday morning as doubts persisted about progress on a U.S.-China trade deal, despite encouraging earnings from some retailers.

Wall Street also awaited minutes from the Federal Reserve’s October meeting to glean further insights about its monetary policy, though Chairman Jerome Powell last week outlined his thoughts about the economy in congressional testimony.

How are major benchmarks faring?

The Dow Jones Industrial Average DJIA, -0.27% was about 60 points, 0.2%, lower, at 27,874, while the S&P 500 SPX, -0.08% was nearly 4 points, 0.1%, lower, at 3,116. The Nasdaq COMP, +0.00% lost about 4 points, less than 0.1%, at 8,566.

On Tuesday, the Nasdaq Composite COMP, +0.00% gained 20.72 points, or 0.2%, to a record 8,570.66, its third consecutive record close. The Dow Jones Industrial Average DJIA, -0.27% fell 102.20 points, or 0.4%, to close at 27,934.02 while the S&P 500 index SPX, -0.08% shed 1.85 point or 0.1% to end the session at 3,120.18.

Read:How can stocks rally when corporate profits are flat? Thank the bond market, analyst says

What’s driving the market?

Trade talks between the U.S. and China are in danger of hitting an impasse, threatening to derail the Trump administration’s plan for a limited “phase-one” pact this year, according to the Wall Street Journal, citing former administration officials.

Both sides remain divided over core issues—including Beijing’s demand for removing tariffs and the U.S.’s insistence on China buying farm products—nearly six weeks after an “agreement in principle” was announced by the White House on Oct. 11.

On Tuesday President Donald Trump said at a cabinet meeting that China needs to make a deal he likes to avoid import tariffs going even higher, with fresh levies set to go into effect Dec. 15, directly hitting American consumers.

“What we’re seeing in the market today is another reminder that tariffs reign supreme,” says TD Ameritrade chief market strategist JJ Kinahan.

“You can have great results from two of the biggest retailers – Target and Lowes – but what seems to matter most of all is if headlines go south on trade.”

David Madden, market analyst at CMC Markets UK, was sanguine on the idea of talks resuming. “Beijing have a track record of standing up to Trump so the trading relationship is likely to be strained in the near-term,” he said in a note to clients.

With nothing else on the economic calendar, investors will be watching for minutes from the rate-setting Federal Open Market Committee, which will issue minutes from its October policy meeting at 2 p.m. Eastern Time.

See:Here’s what may drive stocks even higher (hint: not the trade war or the Fed)

Which stocks are in focus?

Shares of Target Corp. TGT, +12.53%soared toward a record Wednesday, after the discount retailer reported fiscal third-quarter profit and revenue that rose above expectations, and raised its full-year outlook.

Lowe’s Cos. LOW, +4.13%said net income from its third-quarter ending Nov. 1 jumped to $1.05 billion, or $1.36 a share, from $629 million, or 78 cents a share. Shares of the home improvement retailer also touched a new high.

Bristol-Myers Squibb Co. BMY, -1.19%slid in morning trading, after the drug company said a trial of opdivo plus yervoy in treating patients who have had surgery to treat melanoma failed to meet its main goal.

Shares of Eli Lilly & Co. LLY, +0.34% were in focus after the pharmaceutical company said Wednesday that it will create 100 new jobs in Indianapolis as it invests $400 million in its manufacturing facilities at its Lilly Technology Center campus.

Intelsat S.A. I, +20.20% shares extended their rally after a steep decline earlier in the week following a Raymond James downgrade. The stock is still down nearly 50% for the week to date.

Apple AAPL, -0.74% was lower after announcing Wednesday it has started construction of its new $1 billion, 3-million-square-foot campus in Austin, Texas, which will initially employ 5,000 people. President Trump is scheduled to tour the company’s manufacturing facility in Austin on Wednesday.

How are other markets trading?

U.S. Treasury yields edged lower amid doubts on trade, with the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.83% at 1.750%, compared with 1.785% on Tuesday.

Gold GCZ19, -0.38% slipped after a gain on Tuesday, with bullion off 0.1% at $1,472.40 an ounce on Comex.

Oil CLZ19, +2.79% bounced after sinking a day ago, up 0.9% at $55.82 a barrel after shedding 3.2% on the New York Mercantile Exchange, marking its lowest settlement in November.

The ICE U.S. Dollar Index DXY, +0.11%, representing a basket of the greenback’s trading rivals, was virtually unchanged.

Meanwhile, the Stoxx Europe 600 SXXP, -0.37% was lower by about 2 points, or 0.6%, amid a broad retrenchment of equity assets in Europe.

In Asia overnight Wednesday, stocks traded mixed, with the China CSI 300 000300, -0.99% shedding 1%, Japan’s Nikkei 225 NIK, -0.62% falling 0.6% and Hong Kong’s Hang Seng HSI, -0.75% down 0.8%.

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