Wall Street choppy as investors worry about trade war

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(Reuters) – Wall Street was mixed in choppy trade on Monday as investors fretted about an escalating trade war between Washington and its trading partners, while gains in Apple and other stocks offset a slump in energy shares.

Traders were eyeing a July 6 deadline for U.S. tariffs on $34 billion worth of Chinese goods to kick in, posing danger of a strong response from Beijing.

The European Union has warned the United States that imposing import tariffs on cars and car parts would likely lead to counter-measures on $294 billion of U.S. exports, while Canada has vowed to take punitive measures in response to U.S. steel and aluminum tariffs.

“These tit-for-tat trade tariffs will ultimately raise prices for consumers, and will likely dampen demand for products,” said Jack Ablin, Chief Investment Officer at Cresset Wealth Advisors in Chicago.

Ablin said he expected strong U.S. corporate earnings for the quarter ended in June, but that profits for the rest of 2018 were in danger of being hurt by an escalating trade war.

Six of the 11 main S&P 500 sectors fell, led by a 1.86 percent drop in energy .SPNY on the back of a 2 percent drop in Brent crude LCOc1.

Microsoft (MSFT.O) and Apple (AAPL.O) each rose 1 percent or more, pushing the S&P 500 information technology index .SPLRCT up 0.80 percent.

Wall Street pulled back from steeper declines suffered at the start of the session.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 28, 2018. REUTERS/Brendan McDermid

At 2:34 p.m. ET, the Dow Jones Industrial Average .DJI was down 0.1 percent at 24,248.27 points, while the S&P 500 .SPX had gained 0.04 percent to 2,719.52.

The Nasdaq Composite .IXIC added 0.47 percent to 7,545.89.

Also helping the market was Commerce Department data that showed U.S. construction spending increased 0.4 percent in May, more than estimated, amid gains in investment in private and public construction projects.

The Institute for Supply Management (ISM) said national factory activity surged last month, likely as steel and aluminum tariffs disrupted the supply chains, resulting in factories taking longer to deliver goods.

Tesla (TSLA.O) fell 0.3 percent after the electric car maker said it hit its target of producing 5,000 Model 3 sedans per week. Many investors remained skeptical about the financial impact of ramping up production and the quality of the cars being built.

Shares of Casino companies fell as gambling revenue in the Chinese territory of Macau rose less than expected in June.

Wynn Resorts (WYNN.O) sank 8.7 percent, the most on the S&P 500. Las Vegas Sands (LVS.N) fell 7.4 percent after Bank of America downgraded the stock. MGM Resorts (MGM.N) dropped 3 percent.

Dell Technologies took a step closer to becoming a public company again with a deal to buy the tracking stock of its majority-owned VMware unit. The VMware tracking stock (DVMT.N) jumped 8.7 percent, while VMware (VMW.N) gained 9 percent.

Declining issues outnumbered advancing ones on the NYSE by a 1.25-to-1 ratio; on Nasdaq, a 1.12-to-1 ratio favored advancers.

The S&P 500 posted 1 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 39 new highs and 62 new lows.

Additional reporting by Amy Caren Daniel in Bengaluru; Editing by Nick Zieminski

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