Futures drop as China tariff worries cloud Canada trade hopes

[August 30, 2018]   By Shreyashi Sanyal

(Reuters) - U.S. stock index futures fell on Thursday as optimism over U.S.-Canada trade talks was overshadowed by concerns over Washington's tariff dispute with China, which has been the bigger weight on the market for most of the year.

The United States and Canada were upbeat about negotiations so far, raising hopes that the year-long talks will lead to a new deal by a Friday deadline.

But the more critical deadline is likely Wednesday, Sept. 5, which marks the end of a public comment period on Washington's proposal to slap tariffs on $200 billion worth of Chinese goods later that month.

"We've had a pretty significant run and I think that we don't have any more good news to keep that momentum going which is why we're giving up gains, but very modestly, " said Art Hogan, chief market strategist at B. Riley FBR in New York.

"I think this is an environment in which, if not for trade news, then we would be trading higher and we have seen that with the bumps in the Mexico trade talks."

The benchmark S&P 500 has hit a record high in every session since Friday, and gained 2 percent in the period. In comparison, the trade-sensitive S&P industrials sector <.SPLRCI> has gained 1.61 percent.

As has been the case this year, the S&P's recent rally was powered by the technology sector <.SPLRCT>, which jumped 3.33 percent.

But big technology names were slightly lower in premarket trading. However, shares of Amazon.com <AMZN.O> rose 0.1 percent to hit the $2,000 mark, pushing the company closer to joining Apple <AAPL.O> in the $1 trillion market cap club.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 28, 2018. REUTERS/Brendan McDermid

At 7:40 a.m. ET, Dow e-minis <1YMc1> were down 62 points, or 0.24 percent. S&P 500 e-minis <ESc1> were down 4 points, or 0.14 percent and Nasdaq 100 e-minis <NQc1> were down 13.25 points, or 0.17 percent.

Shares of Campbell Soup <CPB.N> dropped 2.6 percent after the company said it would sell two businesses that bring in about $2.1 billion in annual sales, about a quarter of its overall revenue.

Cloud software maker Salesforce.com <CRM.N> fell 3.2 percent after its profit forecast for the current quarter fell below estimates.

Among retailers, Signet Jewelers <SIG.N> jumped 15.3 percent after the company topped sales and profit estimates and raised its full-year sales forecast.

But, Dollar Tree <DLTR.O> slid 5.3 percent and Dollar General <DG.N> was down 3.7 percent after they gave disappointing full-year profit forecasts.

Data from the Commerce Department, on personal consumption expenditures price index for the month of July, is expected at 8:30 a.m. ET, along with the Labor Department's report on initial jobless claims for the week ended Aug. 25.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)

[© 2018 Thomson Reuters. All rights reserved.]

Copyright 2018 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.