By Caitlin Ostroff and Gunjan Banerji 

Global stocks slumped Wednesday as trade talks between the U.S. and China appeared to near an impasse, with President Trump threatening to raise tariffs further.

The Dow Jones Industrial Average dropped 112.93 points, or 0.4% to 27821.09, its biggest fall of the month. The S&P 500 shed 0.4%. The Nasdaq Composite lost 0.5%, retreating from the record hit Tuesday.

Losses deepened and major U.S. indexes fell near session lows after Reuters reported that the first phase of a trade deal between the U.S. and China may not materialize by year-end. Trade has been a key driver of market swings this year and the recent dash for stock records had been driven, in part, by optimism on a final deal.

Stocks in Europe and Asia also logged declines as investors grew concerned that relations between the world's two biggest economies may be further strained after the U.S. Senate passed a bill in support of Hong Kong's antigovernment protesters.

The bill would require the U.S. Secretary of State to certify annually that Hong Kong remained sufficiently independent from Beijing to warrant the special status that has helped the city grow into a global financial hub. China's Foreign Ministry said the act was a violation of international law, while Hong Kong officials said foreign legislatures shouldn't interfere with its internal affairs.

"The Chinese aren't very happy about that bill progressing," said Paul Flood, multiasset portfolio manager at Newton Investment Management. "It does make the tariffs discussion more difficult."

Wednesday's fall punctuates a relatively calm stretch for major U.S. indexes, during which they have ascended to record after record.

A breakdown in the trade talks would derail the White House's plans for a limited "phase one" agreement this year. Investors are also growing jittery that fresh tariffs on Chinese products including smartphones and toys may be put into effect Dec. 15, directly hitting American consumers. Mr. Trump said in a Tuesday cabinet meeting that China needs to make a deal he likes to avoid levies going even higher.

In an interview on CNBC Wednesday, Federal Reserve governor Lael Brainard highlighted that trade uncertainty has been pressuring the economy. Shares of materials companies and technology heavyweights with big exposure to the global economy were some of the biggest decliners in Wednesday's trading session.

Still, she said she sees the economy continuing to grow next year.

The strength of the U.S. consumer was on display Wednesday as corporate earnings drove swings among shares of individual companies. Shares of Target climbed $15.58, or 14%, to $126.43 -- a fresh record and the S&P 500's biggest winner -- after the retail chain posted another quarter of rising sales as the company continued to draw more shoppers online and in its stores.

Lowe's shares jumped $4.43, or 3.9%, to $117.83 after the home-improvement retailer raised its profit forecast and disclosed plans to shut some Canadian stores.

Yana Barton, an equity portfolio manager at Eaton Vance, said she's optimistic about the stock market's near-term trajectory after major indexes have hit a string of recent records. But, she said "a lot of that really hinges on trade and moving from a strategy of hope, to one that has actual meat around some kind of resolution."

Urban Outfitters dropped $4.38, or 15%, to $24.41 after the retailer's third-quarter profit declined.

Meanwhile, the pan-continental Stoxx Europe 600 index fell 0.4%, led by declines in almost every sector.

Investors reached for haven assets, sending the yield on 10-year Treasurys to 1.737% from 1.785% Tuesday.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com

(END) Dow Jones Newswires

November 20, 2019 16:55 ET (21:55 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.