William Geier, Jr., left, and David O'Day work at the New York Stock Exchange, Tuesday, Dec. 11, 2018, in New York. (Photo: AP)
US stock indexes veered through another dizzying cycle Tuesday, shooting to big gains early in the morning before falling modestly in midday trading. By early afternoon, indexes were mixed.
It’s just the latest in a series of sharp turns in direction for the market, which has lurched up and mostly down since late September as investors recalibrate how worried they are about the global trade war, rising interest rates and a slowing economy.
The S&P 500 initially jumped more than 1 percent, following even bigger gains in Europe, on optimism about US-China trade talks. But falling bank stocks helped weigh on indexes as the day went on.
KEEPING SCORE: The S&P 500 was virtually flat at 2,638, as of 1:04 p.m. Eastern time. It had been up as much as 1.4 percent in the morning before giving way to a decline of 0.2 percent in the early afternoon.
Seven of the 11 sectors that make up the S&P 500 were up, with real-estate and consumer-related companies leading the way. Financial stocks were the weakest performers.
The Dow Jones industrial average was down 74 points, or 0.3 percent, at 24,349, and the Nasdaq composite rose 27, or 0.4 percent, to 7,047.
US-CHINA RELATIONS: US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He have spoken by phone about “the promotion of the next economic and trade consultations,” a statement by China’s Commerce Ministry said Tuesday.
That raised hopes that the two countries can make progress on their trade dispute. Investors worry weaker global trade would dent economic growth around the world and corporate profits. The tensions have waxed and waned repeatedly this year, which has helped make the stock market particularly volatile recently.
Another flashpoint for the two countries is the detention of Meng Wanzhou, the chief financial officer of Chinese telecommunications giant Huawei, in Canada. Meng is wanted in the US for allegedly misleading banks about the company’s business dealings in Iran. China has protested her arrest.
WHICH WAY?: Many forces are pushing and pulling the market in different directions, from the trade war to worries about how much higher the Federal Reserve will raise interest rates. On Tuesday, media reports said that China agreed to reduce tariffs on US autos. But at the same time, President Donald Trump threatened to shut down the US government if Congress doesn’t provide money to build a wall at the Mexican border.
In recent weeks, the driving force behind the market’s moves has been changes in investors’ optimism and pessimism, more so than changes in market fundamentals, such as corporate earnings, said Jon Adams, senior investment strategist at BMO Global Asset Management. That can lead to more volatility, not only week to week but also within each day.
“Traditionally, this wouldn’t be enough to move the market this much,” Adams said Tuesday morning about progress in talks between the United States and China, when the S&P 500 was still up more than 1 percent for the day. “But sentiment has been moving markets lately.”
MARKETS OVERSEAS: In Europe, Germany’s DAX was up 1.5 percent, and France’s CAC 40 was up 1.3 percent. Britain’s FTSE 100 was up 1.3 percent.
In Asia, Japan’s Nikkei 225 lost 0.3 percent, South Korea’s Kospi fell less than 0.1 percent to 2,052.97 and Hong Kong’s Hang Seng edged up 0.1 percent.
BUYBACK BOOST: Bank of New York Mellon and Jazz Pharmaceuticals both rose after announcing increased programs to buy back their own stock. Shareholders often like these purchases because they can goose a company’s earnings per share, one of their main measures for success.
Bank of New York Mellon said it would increase its repurchase program by up to $830 million, and its shares rose 1.4 percent to $48.21. Jazz Pharmaceuticals said its board approved an increase of $400 million, and its stock gained 1 percent to $141.04.
YIELDS: The yield on the 10-year Treasury rose to 2.86 percent from 2.85 percent late Monday, while the two-year yield rose to 2.76 percent from 2.73 percent.
The gap between those two yields has been shrinking this year, which has worried some investors. When the 10-year yield falls below the two-year yield, investors call it an “inverted yield curve” and see it as a precursor to a recession.
COMMODITIES: Benchmark US crude oil rose 76 cents to $51.76per barrel. Brent crude, the international standard, gained 49 cents to $60.46.
Gold slipped 70 cents to $1,248.70 per ounce.
CURRENCIES: The dollar rose to 113.30 Japanese yen from 113.21 yen late Monday. The euro slipped to $1.1322 from $1.1353, and the British pound dipped to $1.2522 from $1.2557.