Mixed trade signals turn rally into slump
NEW YORK — Global stock markets pirouetted again on Wednesday as investors chased after mixed signals on global trade tensions, and the S&P 500 erased an early morning jump to drop to its lowest closing level in nearly a month.
One of the day’s few market certainties was oil’s continued rise, and benchmark U.S. crude hit its highest price since 2014. That helped lift energy stocks, but other areas of the market zigged, zagged and zigged again as the day progressed.
Early on, Asian stocks slumped on concerns about the sometimes-heated talk on trade that has been ongoing between the United States and its partners. European stocks later flipped from losses to gains on hopes that a move by the Trump administration indicated a less combative stance with China. U.S. stocks opened higher, but the gains evaporated after a White House adviser said the move wasn’t necessarily a signal of a softer stance.
By the end of the day, the S&P 500 fell 0.9 percent after earlier being up as much as 0.8 percent.
Stocks have swung in recent weeks, even by the hour, on worries about global trade.
Investors were feeling less nervous about it in the morning after the Trump administration indicated it’s shifting away from a plan to impose limits on Chinese investment in U.S. technology companies and high-tech exports to China. Instead, the administration is calling on Congress to enhance an existing review process.
Markets took it as a sign of a less antagonistic stance, but the gains disappeared in the afternoon after Larry Kudlow, director of the National Economic Council, told Fox Business that it should not necessarily be viewed as a softer stance.
“Trade is the hot topic du jour, and it’s having an impact on the market,” said Barry Bannister, head of institutional equity strategy at Stifel.
It’s only adding to pressures that have been mounting on the market. The Federal Reserve is raising interest rates, but more importantly to Bannister, interest rates after accounting for the effects of inflation are set to cross key thresholds. That is putting pressure on stock prices, and he says this bull market that began in 2009 may end by the first quarter of 2020.
Chinese stocks have already fallen into a bear market. Other Asian markets also fell Wednesday.
The strongest area of the U.S. market was the energy sector. Crude jumped after a report showed that U.S. oil inventories dropped more sharply last week. It had already been rising on reports that the Trump administration is pushing other countries to stop importing oil from Iran.
Crude’s rise helped drive energy stocks in the S&P 500 up 1.3 percent, more than double the gain for any of the other 10 sectors that make up the index.