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* Trump says China deal could be delayed until election
* S&P 500, Dow on track for worst day in nearly two months
* Trade-sensitive chip index hits near two-month low
* Indexes drop: Dow 1.29%, S&P 0.95%, Nasdaq 0.93% (Updates to late afternoon, changes dateline, byline)
By Stephen Culp
NEW YORK, Dec 3 (Reuters) - Wall Street set course for its third consecutive sell-off on Tuesday as investor optimism over a potential near-term respite from the U.S.-China trade war evaporated following commentary from President Donald Trump and Commerce Secretary Wilbur Ross.
All three major stock indexes stepped further away from last week's record highs that were fueled by hopes that an interim deal between the United States and China was in the offing.
Those hopes dimmed as President Trump suggested a deal might have to wait until after the 2020 election, and separately, Secretary Ross confirmed that new tariffs on Chinese imports would go into effect on Dec. 15 as scheduled, unless substantial progress was made. comments, on the heels of France's threatened retaliation over potential new U.S. duties on French products, itself a retaliation against a proposed French "digital tax," suggested that America's hydra-headed tariff war against its major trading partners would continue to dominate markets for the foreseeable future. seen this happen numerous times, where there's a trade disappointment and there's a stock market sell-off," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. "There's disappointment that 'phase 1' (of a U.S.-China deal) has been pushed back."
Tariff-sensitive chipmakers were down, with the Philadelphia SE Semiconductor index falling 2.0%, on track for its worst day in nearly two months.
The Dow Jones Industrial Average .DJI fell 357.45 points, or 1.29%, to 27,425.59, the S&P 500 .SPX lost 29.61 points, or 0.95%, to 3,084.26 and the Nasdaq Composite .IXIC dropped 79.97 points, or 0.93%, to 8,488.01.
Shares of AK Steel Holding Corp AKS.N rose 3.3% after miner Cleveland Cliffs CLF.N agreed to buy the company in an all-stock deal worth about $1.1 billion. Therapeutics Inc's BOLD.O shares soared by 105.5% after Japan's Astellas Pharma Inc 4503.T said it would buy the U.S. drugmaker for about $3 billion in cash. issues outnumbered advancing ones on the NYSE by a 1.80-to-1 ratio; on Nasdaq, a 1.82-to-1 ratio favored decliners.
The S&P 500 posted 1 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 29 new highs and 63 new lows.
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