The Wall Street Journal first reported the US plans to delay slapping China with additional tariffs as both sides try to work out a so-called phase one trade deal. A deadline for the two countries had been set for Dec. 15. If an agreement wasn’t reached by then, the new U.S. tariffs would take effect.
US negotiators have also asked Chinese officials to commit to some agricultural purchases up front before moving forward with a deal, the report added. Meanwhile, China wants its agricultural purchases to be proportional with the amount of tariffs the U.S. rolls back.
The US is also reportedly pushing for a quarterly review of the promised purchases. The report initially sent stock futures higher earlier in the day, but the excitement did not last long.
“It’s nothing official yet. That’s the thing,” said Quincy Krosby, a chief market strategist at Prudential Financial. “Market participants are so used to headlines turn out to not be true that they are waiting to see what will be confirmed by administration officials.”
CNBC’s Jim Cramer said he was skeptical of the report. “My understanding is the president doesn’t know anything about this right now,” Cramer said.
Before the bell, Dow futures were down more than 100 points earlier in the day after the South China Morning Post said China and the US are unlikely to reach a trade deal this week.
That report said chances of a deal on that front are falling as the US focuses on finalizing a trade deal with Mexico and Canada. Sources told CNBC on Monday that House Democrats and the Trump administration are close to a tentative deal that would replace North American Free Trade Agreement.
Investors also kept an eye on the Federal Reserve as the central bank kicks off its last two-day monetary policy meeting of the year. The Fed is expected to hold rates steady.
“We still expect the pressure to be on the Fed for lower not higher [rate], but clearly Friday’s employment number has that bar for more cuts very high,” said Gregory Faranello, the head of US rates trading at AmeriVet Securities, in a note. “In many ways, the bar for hikes even higher.”