President Donald Trump decided to restore tariffs on steel and aluminum imports from Brazil and Argentina, attacking what he saw as both countries' "massive devaluation of their currencies." Both South American nations were among a group of U.S. allies that Trump had exempted from steel and aluminum tariffs in March 2018. The Trump administration also proposed tariffs of up to 100% against $2.4 billion of French imports to punish France for a new digital-services tax that hits U.S. technology companies.
Worsening the mood, data from the Institute for Supply Management (ISM) showed the US manufacturing sector contracted for a fourth straight month at 48.1 in November from 48.3 the month before, as new orders slid. New orders dropped to 47.2 from 49.1, matching a reading from July that was the lowest since June 2012. A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 indicates contraction. That erased the market cheer from upbeat Chinese factory surveys released over the past few days.
Investor optimism that the U.S. and China were nearing a trade deal helped spur the market's milestone-setting run this fall, lifting it from a summer slide brought on by recession fears and uncertainty over trade. The negotiations to end the longstanding trade war could face a tougher path this month following a flareup over Hong Kong, however.
China said on Monday US military ships and aircraft won't be allowed to visit Hong Kong, and also announced sanctions against several US non-government organizations for encouraging protesters to "engage in extremist, violent and criminal acts."
Shares of metal companies rallied, with United States Steel up 4.2% and AK Steel up 4.7% after Trump's remarks.
Homebuilders fell broadly after the government report showing that spending on construction projects declined unexpectedly in October. Hovnanian Enterprises slumped 6.9%.
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