Market Snapshot: Dow futures briefly sink over 400 points Monday night as Trump trade adviser declares China trade deal ‘over’

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U.S. stock-index futures Monday night briefly skidded by more than 400 points, after White House trade adviser Peter Navarro implied to Fox News in a late-Monday interview that a hard-fought trade agreement that was signed with China in January had been terminated by President Donald Trump.

Later, Navarro said his comments were taken out of context and the phase-one pact remained in force. Trump also tweeted that the agreement was intact.

How are benchmarks performing?

Futures for the Dow Jones Industrial Average YM00, -0.05% YMU20, -0.05% were last up 43 points, or 0.2%, at 25,993, but had shed 440 points, touching a low at 25,514, according to FactSet data. Those for the S&P 500 index ES00, -0.03% ESU20, -0.03% were trading virtually unchanged at 3,115.50 but had traded at as low as 3,060. Nasdaq-100 futures NQ00, -0.17% NQU20, -0.17%, meanwhile, lost 5.75 points, or 0.1%, at 10,119, but had seen sharper losses as well.

On Monday, the Dow DJIA, +0.59% advanced 153.50 points, or 0.6%, to end at 26,024.96. The S&P 500 SPX, +0.65% rose 20.12 points, or 0.7%, to finish at 3,117.86, while the Nasdaq Composite COMP, +1.10% picked up 110.35 points, or 1.1%, closing at a record high of 10,056.47, while booking its seventh day in a row of gains and clinching its longest win streak since Dec. 26, 2019, according to Dow Jones Market Data.

What’s driving the market?

Markets got a jolt of late-night volatility after Navarro, in a Monday evening interview on Fox News, said the China trade deal was over, citing unnamed intelligence officials that allegedly point to a Wuhan laboratory as the source of the novel strain of coronavirus that results in COVID-19.

“Here’s the turning point,” Navarro told Fox host Martha MacCallum on “The Story.” “They came here on January 15th to sign that trade deal, and that was a full two months after they knew the virus was out and about,” he said.

Here’s an excerpt of the exchange on Fox:

McCallum: “The president…he obviously really wanted to hang onto this trade deal, as much as possible, he wanted them to make good on the promises, because there had been progress made on that trade deal. But given everything that’s happened and all the things you just listed, is that over?”

Navarro: “It’s over, yeah.”

Later, Navarro said that his comments were “taken wildly out of context.” They had nothing at all to do with the phase-one trade deal, which continues in place, he told the Wall Street Journal. “I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world,” he was quoted as saying.

Trump also said via Twitter Monday night that the China trade was “fully intact.”

“Hopefully they will live up to the terms of the agreement!” he wrote.

The Trump administration has long blamed China of mishandling the COVID-19 outbreak.

The rising tensions between China and the U.S. follows Trump referring to the virus that was first identified in Wuhan, China in December as the “Kung flu,” during a Saturday rally in Tulsa, Okla., publicly using a term that the White House had previously distanced itself from and one that is viewed as a racial slur against the Chinese community and Asians broadly.

Last Thursday, Trump also said the U.S. has the option of “a complete decoupling from China,” a day after Secretary of State Mike Pompeo visited with a top Chinese official in Hawaii to smooth out differences.

A report from Bloomberg on Friday had indicated that China planned to step up purchases of U.S. soybeans, corn and ethanol in line with a U.S. phase-one trade deal, citing unnamed sources familiar with the discussions.