US stocks claw back early losses in a choppy session of trade

US stocks fell at the open Monday as global trade fears mounted, before rallying in afternoon trade.

The Dow Jones Industrial Average fell 1.6%, or about 400 points, and was on track for its lowest close since May 3 before fully reversing those falls in the afternoon. The Nasdaq Composite initially shed 0.6% before closing more than 1% higher, while the S&P500 edged back into positive territory.

Apple shares dropped more than 2% after Qualcomm said a Chinese court had ordered the company to stop selling several iPhones in China, citing patent violations.

But like the broader market, the stock rallied back to close in positive territory.

The S&P 500’s energy sector initially plunged more than 3% as oil reversed sharp gains it had notched last week when OPEC and other major producers agreed to cut production levels. West Texas Intermediate and Brent dropped nearly 2% to around $US51.50 and $US61, respectively. Bank and healthcare stocks were also lower.

Political tension in the UK weighed on financial markets across the Atlantic, with the pan-European Stoxx 600 down 1.8% and the FTSE 100 lower by 0.8%. Prime Minister Theresa May abruptly delayed a parliamentary vote on a Brexit bill scheduled for Tuesday, casting further uncertainty on her plan to leave the European Union.

Investors were also concerned the arrest of Huawei Technologies CFO Meng Wanzhou could undermine trade negotiations between the US and China, according to UBS strategist Vincent Heaney.

Optimism toward a trade truce between the largest economies reached earlier this month has already been waning. On Sunday, US Trade Representative Robert Lighthizer said that March 1 is a “hard deadline” for a deal. He also reiterated tariffs would be increased if one wasn’t reached.

“For now, we expect that recent choppiness in the markets will continue until some material progress is made in the trade dispute with China,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management.

Markets in Asia stumbled following a series of weaker-than-expected economic data out over the weekend. Japan’s economy, the third largest in the world, grew at a slower pace than initially thought in the third quarter, revised downward to contract the most since 2014. In China, data showed exports weakened sharply in November.

Elsewhere, the dollar climbed against a basket of peers. Treasury yields were mostly unchanged.

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