Stocks cling to tiny gains as investors parse trade signals
The Associated Press
Major U.S. stock indexes closed mixed Tuesday, shedding most of their gains from earlier in the day, after a published report revealed that an interim trade deal between the U.S. and China does not remove tariffs on Chinese goods.
The benchmark S&P 500 and Nasdaq composite finished slightly off their record highs from a day earlier. The Dow Jones Industrial Average notched a slight gain. Small-company stocks rose.
Technology stocks accounted for much of the selling. The sector is particularly sensitive to developments in trade relations because many of the companies rely on China for sales and supply chains.
Investors also bid up shares in several big banks, including JPMorgan Chase and Citibank, after the companies reported surprisingly good quarterly results.
The market’s late-afternoon burst of selling came a day before the U.S. and China were due to sign a preliminary trade agreement in Washington. Optimism that the deal will bring the two economic powerhouses closer to ending the dispute threatening global economic growth has helped drive markets higher for weeks.
Still, reports suggesting that U.S. tariffs on Chinese goods will remain in place until at least after this year’s election appeared to dim some investors’ enthusiasm over the deal.
“Would the market be more satisfied with a reduction in those tariffs? Absolutely,” said Quincy Krosby, chief market strategist at Prudential Financial. “Nonetheless, you don’t want to have an escalation in the tariff war. That was the most important thing for the market.”
The S&P 500 index fell 4.98 points, or 0.2%, to 3,283.15. The index had been up as much as 0.2% earlier. The Nasdaq slid 22.60 points, or 0.2%, to 9,251.33.
The Dow rose 32.62 points, or 0.1%, to 28,939.67. The Russell 2000 index of smaller company stocks climbed 6.14 points, or 0.4%, to 1,675.74.
Bond prices rose. The yield on the 10-year Treasury slipped to 1.81% from 1.84% late Monday.
President Donald Trump and China’s chief negotiator, Liu He, are scheduled to sign a modest trade agreement Wednesday that calls for the U.S. to ease some sanctions on China. The U.S. dropped its designation of China as a currency manipulator in advance of the signing.
Beijing, meanwhile, will step up its purchases of U.S. farm products and other goods.
While limited in its scope, investors have welcomed the deal in hopes that it will prevent further escalation in the conflict that has slowed global growth, hurt American manufacturers and weighed on the Chinese economy.
With the trade issue entering a new stage, Wall Street is focusing on the rollout of corporate earnings reports over the next few weeks.
Several large banks were among the companies that kicked off the latest earnings season on Wall Street Tuesday.
JPMorgan Chase rose 1.2% after the banking giant reported a surge in profits because of a blowout quarter from its trading desks. The earnings handily beat analysts’ forecasts. Citigroup climbed 1.6% after reporting a similar jump in profits because of its trading operations.
Wells Fargo did not fare as well. The bank’s stock slumped 5.4% as its profit and revenue dropped because of hefty costs and lower interest rates. Wells Fargo is still under growth restrictions by regulators after years of missteps, beginning in 2016 with the uncovering of millions of fake checking accounts its employees opened to meet sales quotas.
Delta Air Lines rose 3.3% after the company increased its fourth-quarter profit to $1.1 billion by adding more flights over the holiday period and packing them even more full of passengers. The results beat Wall Street’s forecasts.