Dow ends lower after Trump hints that a trade deal with China could come after the 2020 election

Jessica Menton | USA TODAY

Show Caption Hide Caption Trump calls France's Macron 'insulting' to NATO President Donald Trump said that French President Emmanuel Macron’s recent comments about NATO were very insulting.

U.S. stocks pared losses Tuesday in the final hour of trading after trade jitters sent major averages tumbling earlier in the day.

Concerns that a trade deal with China could be delayed sent stocks lower for a third consecutive session. The Dow Jones industrial average closed 280 points lower after the blue-chip index shed more than 400 points in morning trading. The broader Standard & Poor's 500 and the tech-heavy Nasdaq Composite fell 0.7% and 0.6%, respectively.

Major averages have retreated from last week’s record highs because of fresh trade worries and weaker-than-expected U.S. manufacturing data. Investor concerns grew Tuesday after President Donald Trump suggested that a trade deal with China could be delayed beyond the presidential election in 2020.

“In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now, and we will see whether or not the deal is going to be right,” Trump told reporters in London at a NATO summit.

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Heightened trade fears come a day after Trump threatened new tariffs on several more countries. On Monday, the president said he would raise tariffs on steel and aluminum imports from Brazil and Argentina. He also proposed slapping tariffs on France's exports.

Washington and Beijing have imposed tariffs on billions of dollars’ worth of each other’s goods since the beginning of 2018, rattling investors, who fear a further slowdown in global growth.

In recent months, however, optimism over a possible “phase one” trade deal has helped boost investors’ appetite for risky assets. Better-than-expected corporate earnings, a strong labor force and firming housing data have also eased fears about a slowdown in U.S. growth.

Progress on trade discussions between the world's two biggest economies needs to come sooner rather than later if economic growth or corporate profits are going to improve next year, some analysts said.

“We expect the U.S. economy to continue to grow in 2020, which we believe will support stock market gains, but we are increasingly mindful of the advanced age of the economic expansion and bull market," John Lynch, executive vice president and chief investment strategist at LPL Financial, said in a note Tuesday.

"There will continue to be uncertainty in the markets, but we continue to believe there is a low likelihood of recession in the coming year,” he said.

Officials face a looming deadline on tariffs. The U.S. is poised to impose an additional 15% tariff on roughly $160 billion of Chinese products on Dec. 15. If the two sides can’t reach a deal, additional U.S. levies on Chinese exports will go into effect.

In Tuesday’s trading action, shares of trade-sensitive industrial and technology companies weighed on the broader market. The stock prices of Caterpillar and Boeing fell 2% and 0.9%, respectively. Tech titan Apple lost 1.8% and chip maker Intel dropped 2.8%.

Investors snapped up safer assets. Gold prices rose 1%. Meanwhile, the yield on the 10-year U.S. Treasury note fell to 1.71% from 1.84% a day earlier.