Mar­kets list­less as key trade talks loom

Houston Chronicle - - MARKET SUMMARY -

Wall Street capped a day of mostly list­less trad­ing with a mixed fin­ish Mon­day as gains in in­dus­trial com­pa­nies, banks and en­ergy stocks out­weighed losses else­where.

Small-company stocks fared bet­ter than the rest of the mar­ket as in­vestors shifted fo­cus away from the tail end of a rel­a­tively strong cor­po­rate earn­ings sea­son and looked ahead to key trade talks be­tween the U.S. and China later this week.

U.S. Trea­sury Sec­re­tary Stephen Mnuchin is lead­ing a del­e­ga­tion set to meet with Chi­nese of­fi­cials on Thurs­day and Fri­day. The talks are aimed at re­solv­ing a trade war that threat­ens to stunt global eco­nomic growth, in part by rais­ing prices on goods for con­sumers and com­pa­nies. The sit­u­a­tion could get worse when a truce on tar­iffs ex­pires in early March.

“The prob­lem is, if this trade is­sue goes on long enough, it will metas­ta­size it­self to our econ­omy,” said Sam Sto­vall, chief in­vest­ment strate­gist at CFRA.

The Dow Jones In­dus­trial Av­er­age fell 53.22 points, or 0.2 per­cent, to 25,053.11. The S&P 500 in­dex rose 1.92 points, or 0.1 per­cent, to 2,709.80. The Nas­daq com­pos­ite added 9.71 points, or 0.1 per­cent, to 7,307.90. The Russell 2000 in­dex of smaller-company stocks gained 12.59 points, or 0.8 per­cent, to 1,518.98. Euro­pean mar­kets fin­ished higher.

U.S. in­dexes spent much of the day wa­ver­ing be­tween small gains and losses on a light day of company earn­ings news.

Com­pa­nies have mostly re­ported bet­ter-than-ex­pected earn­ings for the last three months of last year. Still, con­cerns have been build­ing about whether prof­its can keep grow­ing this year, es­pe­cially af­ter com­pa­nies’ strong gains in 2018 fol­low­ing a sweep­ing cor­po­rate tax cut.

So far, 66.4 per­cent of com­pa­nies in the S&P 500 have re­ported earn­ings, with 69 per­cent beat­ing an­a­lysts’ fore­casts. Earn­ings growth comes in at 14.5 per­cent for the quar­ter. But some com­pa­nies have tem­pered their out­looks and an­a­lysts cur­rently ex­pect a 2 per­cent con­trac­tion in the first quar­ter.

Signs that the global econ­omy is slow­ing have also added to the mar­ket’s wor­ries about earn­ings in 2019.

Economists’ fears of a global slow­down were given ad­di­tional fuel from a re­port Mon­day show­ing Bri­tain’s econ­omy had its slow­est eco­nomic growth since the af­ter­math of the global fi­nan­cial cri­sis. Both Europe over­all and China are con­tend­ing with slower growth.

Traders also were keep­ing an eye on the ne­go­ti­a­tions in Wash­ing­ton aimed at avert­ing an­other fed­eral govern­ment shut­down.

Democrats and the GOP re­mained sep­a­rated Mon­day over how much to spend on Pres­i­dent Don­ald Trump’s promised bor­der wall. A Fri­day mid­night dead­line is loom­ing to pre­vent a sec­ond par­tial govern­ment shut­down.

Even if it shuts down again, it’s not likely to have a ma­jor im­pact on the stock mar­ket, Sto­vall said.

“While shut­down is cer­tainly a pos­si­bil­ity, it’s more of an an­noy­ance,” he said.

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