NEW YORK (Reuters) - U.S. stocks fell on Wednesday as potential U.S. restrictions on Chinese telecom companies reinforced investor concerns about worsening trade relations between the United States and China.
Wall Street’s major indexes had briefly moved higher after the Federal Reserve left interest rates unchanged in its policy announcement on Wednesday but gave up gains as the session progressed.
Stocks slid even further on the news that U.S. President Donald Trump is considering issuing an executive order restricting certain Chinese companies from selling telecommunications equipment in the United States.
The Dow Jones Industrial Average fell 174.07 points, or 0.72 percent, to 23,924.98, the S&P 500 lost 19.13 points, or 0.72 percent, to 2,635.67 and the Nasdaq Composite dropped 29.81 points, or 0.42 percent, to 7,100.90.
Trade relations between the United States and China have already been strained as Trump has weighed imposing tariffs on up to $150 billion of Chinese imports. A Trump administration delegation is scheduled to visit Beijing on Thursday and Friday for talks with top Chinese officials.
The specter of deteriorating U.S.-China trade relations has weighed on Wall Street over the past few weeks.
“It’s hard to see investors willing to take increasing risk ahead of a couple more weeks of trade discussions and negotiations to come,” said Matthew Miskin, market strategist at John Hancock Investments in Boston.
The Federal Open Market Committee’s unanimous decision to keep its lending rate in a target range of between 1.50 percent and 1.75 percent offered fleeting relief to investors.
The Fed expressed a confident economic outlook, saying activity had expanded at a moderate rate and that inflation was close to its 2 percent target. It is expected to increase rates in June.
Snap Inc shares plunged 21.9 percent after the Snapchat owner fell short of Wall Street forecasts for revenue and regular users.
PayPal Holdings Inc shares tumbled 4.1 percent after Bloomberg reported that Amazon Inc is offering retailers discounts to adopt its payment system. Biotechnology stocks also took a hit as shares of Gilead Sciences Inc dropped 7.8 percent after the company reported a lower quarterly profit on falling sales of its flagship hepatitis C drugs. Shares of insurers MetLife Inc, American International Group and Prudential Financial Inc declined after disability insurance provider Unum Group reported a lower-than-expected profit. Unum shares fell 17.0 percent.
On the other end of the spectrum, Apple Inc shares rose 4.4 percent after the company late Tuesday posted resilient iPhone sales in the face of waning global demand and promised $100 billion in additional stock buybacks. Optics firm Lumentum Holdings Inc, an Apple supplier, climbed 11.1 percent after reporting quarterly results earlier on Wednesday. Mastercard Inc rose 3.1 percent after it reported a better-than-expected quarterly profit, boosted by higher consumer spending on credit and debit cards.
Declining issues outnumbered advancing ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favored advancers.
The S&P 500 posted 13 new 52-week highs and 23 new lows; the Nasdaq Composite recorded 81 new highs and 45 new lows.
Volume on U.S. exchanges was 7.27 billion shares, compared with the 6.55 billion-share average for the full session over the last 20 trading days.
Additional reporting by Sruthi Shankar in Bengaluru, Sinéad Carew and Chuck Mikolajczak in New York; Editing by Shounak Dasgupta, Chizu Nomiyama and Jonathan Oatis
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