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Trump Volatility in Markets Is Back

After weeks of relative calm and record highs, stocks in the United States fell Tuesday after President Trump’s comments on his China trade war unnerved investors and brought back the market volatility that has become a signature of the dispute between the world’s two largest economies.

Speaking in London where he is attending a NATO summit, Mr. Trump hinted that he was ready to wait until after the 2020 election to come to terms with China. During a wide-ranging appearance with Jens Stoltenberg, the NATO Secretary General, Mr. Trump tamped down hopes that an agreement would be struck before the end of the year, telling reporters: “I have no deadline, no.”

On Wall Street, the remarks sent stocks sharply lower. The biggest drops came in energy and technology shares, which are sensitive to the outlook for both the trade war and the global economy, which is showing clear signs of slowing down.

The S&P 500 was on track for its worst loss since Oct. 8.

For much of the last few months, trading has been characterized by incremental upward moves that, over time, produced solid gains for investors.

The S&P 500 rose 2 percent in October, and 3.4 percent last month. Those gains, however, have come with little indication that the fundamental outlook for corporate earnings or the economy has improved markedly, leaving stocks vulnerable to a pullback.

The early days of December suggest that pullback may have arrived, as investors have grown restless about the lack of tangible progress toward completing the so-called Phase 1 trade deal that was announced in October.

Now, the looming imposition of another 15 percent tariff that the Trump administration planned for Dec. 15 is forcing investors to think hard about whether it’s a good time to take some of this year’s gains off the table. Year to date, stocks have enjoyed a strong year. The S&P remains up more than 20 percent in 2019. Some major American companies have recorded huge gains. In tech, which has been under heavy public and political scrutiny, Apple is up 60 percent and Facebook has surged 50 percent so far this year. Global conglomerate General Electric is also up 50 percent.

The levy scheduled to go into effect later this month could be a heavier hit to the economy as it would touch another $160 billion of Chinese goods, including consumer products such as smartphones, laptops and footwear. That could weaken what is currently the key pillar of growth for the United States: consumer spending.

Recent updates on other areas of the economy have suggested ongoing weakness. On Monday, a key gauge of activity in the American industrial economy showed the sector contracted in November for the fourth consecutive month.

In the first two trading days of December, stocks have fallen about 2 percent. That sell-off likely recalls painful memories for investors. Last year, stocks were hammered by a 9 percent sell-off in December that culminated in a Christmas Eve plunge that nearly marked the end of the more than decade-old bull market for stocks.

Tuesday’s sell-off struck overseas markets in addition to the United States. France’s CAC 40 and Britain’s FTSE 100 both dropped nearly 1 percent.

In Asia, China’s currency slipped while Japan’s benchmark Nikkei 225 lost 0.6 percent, Australia’s S&P/ASX 200 slid 2.2 percent and Hong Kong’s Hang Seng fell 0.2 percent.

Investors moved money to the safety of American Treasury bonds, pushing prices up, and yields down. The yield on the 10-year Treasury note was down about 1.70 percent at 11 a.m., a sharp drop from the previous day. Crude oil prices slipped slightly.

The Associated Press provided additional reporting.

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