Wall Street dips after Trump cancels North Korea summit, targets car imports

(Reuters) - U.S. stocks dropped on Thursday, but were well off the session lows hit after President Donald Trump canceled a summit with North Korea’s Kim Jong Un and threatened to impose tariffs on auto imports.

Trump canceled the June 12 meeting citing Pyongyang’s “open hostility,”, even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site.

The market, already lower due to a slide in oil prices and worries over Trump ordering a national security investigation into car and truck imports, dropped sharply after the meeting was called off.

The autos probe, ordered on Wednesday, could lead to new tariffs and China called the move an “abuse” of the national security clauses and said it would defend its interests.

Market participants said the drop after the summit was canceled was a knee-jerk reaction.

“Really not sure why people are looking at it so negatively, except when world politics is unstable, investors’ knee-jerk reaction is to sell first and ask questions later,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“The bigger news has really been the proposed tariffs on foreign cars, the administration provides so much potential change everyday, that it’s difficult for investors to see consistency to the economic future.”

At 13:24 p.m. ET, the Dow Jones Industrial Average .DJI was down 64.85 points, or 0.26 percent, at 24,821.96, the S&P 500 .SPX was down 4.23 points, or 0.15 percent, at 2,729.06 and the Nasdaq Composite .IXIC was up 1.98 points, or 0.03 percent, at 7,427.94.

Earlier in the session the blue chip Dow .DJI fell as much as 1.1 percent to touch a two-week low.

Defense stocks jumped after Trump called off the North Korea meeting and warned that the U.S. military was ready in the event of any reckless acts by North Korea.

Seven of the 11 major S&P sectors were in the red, with financials .SPSY dropping 0.67 percent.

The big banks were trading lower as the minutes from the Federal Reserve’s latest meeting tempered expectations of faster interest rate hikes.

The energy sector .SPNY fell 1.25 percent alongside a slide in oil prices.

U.S. crude future CLc1 declined about 1 percent, with expectations building that OPEC could wind down an output deal due to concerns about supplies from Venezuela and Iran. [O/R]

Ford (F.N) and General Motors (GM.N) gained on the possibility of tariffs on European and Asian car imports. U.S.-listed shares of Fiat (FCAU.N) fell 1.5 percent.

Best Buy Co (BBY.N) tumbled 7.5 percent after the consumer electronics retailer reported a slowdown in quarterly online sales and did not update its full-year outlook.

Advancing issues outnumbered decliners by a 1.01-to-1 ratio on the NYSE and for a 1.02-to-1 ratio on the Nasdaq.

The S&P index recorded 19 new 52-week highs and one new low, while the Nasdaq recorded 89 new highs and 37 new lows.

Reporting by Medha Singh and Savio D'Souza in Bengaluru; Editing by Sriraj Kalluvila