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Stocks Fall as U.S.-China Tension Rises

Increased tensions ahead of trade negotiations between the United States and China knocked down stocks on Wall Street on Tuesday and stretched the market’s losses deeper into a fourth week.

Washington blacklisted a group of Chinese companies after claiming that their technology plays a role in the repression of China’s Muslim minority groups. The latest move casts more doubt on whether the world’s two largest economies will find a resolution to their long-running and economically damaging trade war. Envoys from the U.S. and China are preparing for another round of negotiations this week.

“The jockeying for position in front of the Thursday and Friday meetings in Washington has intensified perhaps more than the market could have imagined,” said Julian Emanuel, chief equity and derivatives strategist at BTIG.

The S&P 500 fell 45 points, or 1.6%, to 2,893.

The Dow Jones industrial average lost 313 points, or 1.2%, to 26,164. The Nasdaq lost 132 points, or 1.7%, to 7,823.

Technology stocks were among the biggest losers as chip makers absorbed the impact of the latest U.S. restrictions on sales to China. The sector has been absorbing much of the volatility from swings in trade war sentiment because many of the companies face bigger risks to sales and supply chains.

Qualcomm, a chipmaker which relies heavily on sales to China, fell 4.6%.

Safe-play sectors like utilities held up better.

Bond prices rose. The yield on the 10-year Treasury fell to 1.53%.

European markets fell broadly. The British government warned that chances of a separation deal with the European Union are fading. The United Kingdom is on track to leave the 19-nation block on Oct. 31 but doesn’t yet have an agreement on trade in place.

The separation is also weighing on the broader European economy, which is already facing slower growth amid international trade disputes.

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