Health care companies led stocks lower on Wall Street Monday as investors waited for more details on reports that the U.S. and China are moving closer to a deal to resolve their costly trade dispute.
The sell-off was most pronounced in sectors that have shown strong gains over the last two months, including health care and technology. Financial stocks also took heavy losses.
The world’s two largest economies have pulled back from an immediate escalation of their damaging trade war since they started negotiating last month. President Donald Trump postponed a deadline for raising tariffs on more Chinese goods, citing progress in a series of talks. Now, media reports say the nations could strike a deal this month.
“The devil is still in the details and those details are still pretty sparse at this point,” said David Lefkowitz, senior Americas equity strategist at UBS Global Wealth Management. “When tariffs might be removed is definitely a key question, and also there’s still some uncertainty about whether or not a deal will be consummated.”
The S&P 500 index dropped 10.88 points, or 0.4 percent, to 2,792.81. The index, a benchmark for many mutual funds, is still up 11.4 percent so far this year.
The Dow Jones Industrial Average fell 206.67 points, or 0.8 percent, to 25,819.65. The average was briefly down more than 414 points.
The Nasdaq composite lost 17.79 points, or 0.2 percent, to 7,577.57. The Russell 2000 index of smaller companies gave up 14.20 points, or 0.9 percent, to 1,575.44.
Major indexes in Europe finished mostly higher.
Investors have been hoping for a resolution in the long-running trade dispute between the world’s biggest economies, which centers on China’s technological ambitions. Washington claims Beijing is stealing technology and forcing companies to turn over technology in order to do business.
Tit-for-tat tariffs imposed by both nations have raised prices on a variety of goods. Now, both sides could be close to a deal that would call for China to cut tariffs on U.S. farm, auto and other products, while the U.S. removes most sanctions on imports, according to media reports.
Optimism that a trade pact could be finalized soon gave markets an early boost Monday, but the rally faded as traders sized up mixed U.S. construction spending data.
The Commerce Department said construction spending edged down 0.6 percent in December amid declines in residential construction and government projects.
