U.S. stocks ended their longest winning streak in two months as investors weighed the outlook for trade talks and interest rate policy.
The S&P 500 index closed slightly lower as a drop in industrial companies weighed on the gauge, which had climbed more than 5 percent over the previous five sessions.
The S&P 500 index fell 0.03 percent at the close of trading in New York.
President Donald Trump’s threat to raise duties again on China if President Xi Jinping doesn’t meet with him at this month’s Group of 20 summit overshadowed some of the optimism generated by last week’s deal to avoid tariffs on Mexican imports.
Sentiment still is cautious among stock buyers after a horrific month of May for global equity markets, with investors looking to the G-20 summit in Japan as the next possible site for a breakthrough in the trade dispute between the world’s two largest economies.
As traders have added bets on lower U.S. interest rates, Trump stepped up his criticism of Fed policy in tweets Tuesday, calling borrowing costs “way too high” amid “VERY LOW INFLATION.”
“We are going to continue to be range-bound,” Joe “JJ” Kinahan, the chief market strategist at TD Ameritrade, said in an interview at Bloomberg’s New York headquarters.
“There’s the fear of missing out in case the tariffs situation with China is completely settled, so people don’t want to necessarily sell. Now we’re at the top of the range, and I think we’re going to see people who are hesitant to continue to buy.”
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Meanwhile, as Wall Street businesses start taking control of their operations in China, they may find the competitive landscape facing them shifting significantly over the next few years.
The financial-market internationalization that opened the door for companies from JPMorgan Chase to UBS Group to become majority owners of local securities joint ventures also has set the stage for a more ominous change — a state-encouraged wave of consolidation among China’s 131 securities businesses, which between them earned slightly less than Goldman Sachs Group last year.
Beijing’s twin goals of opening its $44 trillion financial industry to competition while at the same time averting U.S. trade sanctions all but guarantee that local securities companies — many of which are state-owned — will get merged into entities more capable of taking on foreign companies.
A pledge to let overseas investment banks start acquiring full ownership of local JVs in two years has added to the urgency.
China wants to create “bigger, stronger investment banks that could pit themselves against international peers,” said Will Shum, a portfolio manager at iFAST Financial (HK) Ltd.
“As trade tensions escalate and China is forced to increase the pace of opening up its financial industry, we might see a year of (mergers and acquisitions) for Chinese brokerages.”