Stocks Mixed After Early Rally Sputters
December 11 2018 - 12:40PM
Dow Jones News
By David Hodari and Akane Otani
U.S. stocks gave up much of their early gains Tuesday as
investors weighed signs of progress in trade talks between
Washington and Beijing against broader concerns about slowing
growth.
The Dow Jones Industrial Average slpped about 0.3%, to 24417,
retreating from its high for the day, when the Dow had added more
than 300 points. The S&P 500 rose 0.15% and the Nasdaq
Composite added 0.5%.
Stock futures rallied early Tuesday after President Trump said
on Twitter that "very productive conversations" were happening
around trade. Shares of automakers also rose on reports that
China's cabinet was considering proposals to cut tariffs on
U.S.-made cars.
Still, as the day progressed, major indexes pared much of their
gains, the latest example of stocks being unable to sustain a rally
throughout a trading session.
Between lingering geopolitical tensions and signs of slowing
growth around the world, many investors say they are heading into
2019 with muted expectations. BlackRock cautioned in its annual
investment outlook that negative returns across both stocks and
bonds--a relatively rare phenomenon--could become more common as
the bull market ages.
"The fragility of the market stems from the awareness that 2019
will not look anything like 2018 in terms of earnings and economic
growth," said Art Hogan, chief market strategist at B. Riley
Financial. "Investors are getting used to this idea that this could
be as good as it gets."
Companies that have become barometers for investors' sentiment
around trade talks climbed, with Caterpillar and Deere adding
around 1% apiece.
Apple shares missed out on broader gains, trading around the
flatline as the company tried to get a Chinese court to reconsider
its decision to ban sales of older iPhones in China.
The court ruling added another source of friction in the trade
skirmish between the world's two largest economies, as did the
recent arrest in Canada of a top executive at Chinese firm Huawei
Technologies.
Elsewhere, the Stoxx Europe 600 rose 1.8%, reversing course
after U.K. Prime Minister Theresa May's postponement of a crucial
Brexit vote in parliament Monday sent shares sliding. Ms. May's
shock decision to pull the vote further diminished many investors'
willingness to bet on U.K. assets, some said.
"If you're a macro investor, you're going to get blown out of
the water by events like yesterday's," said John Wraith, head of
U.K. rates strategy at UBS. "It makes investors incapable of
trading those markets with any conviction whatsoever, so you see a
lot of fund managers staying neutral and keeping their exposure to
a minimum."
Shares in Asia were mixed, with India's Nifty 50 index slumping
1.9% after the governor of its central bank unexpectedly resigned
from his post.
Central banking policy was also a subject of focus in the U.S.,
where data showed producer prices--another gauge of
inflation--rising for the third consecutive month.
Investors and analysts widely expect the Federal Reserve to
raise short-term interest rates when it meets next week, with CME
Group data suggesting the market is pricing in a 78% probability of
a rate hike.
Any forward guidance out of the Fed will be closely scrutinized,
especially since some investors believe Chairman Jerome Powell has
conveyed mixed messages over recent months. Mr. Powell jolted
markets after suggesting rates weren't close to neutral and then
subsequently appearing to backtrack on those remarks.
"I think he got a bit ahead of himself saying that we're not
close to neutral," said Mark Heppenstall, chief investment officer
at Penn Mutual Asset Management. "I think that was language we
weren't prepared for and it helped tip the market. Now I think
you'll see his language more focused on gradual patience."
Write to David Hodari at David.Hodari@dowjones.com and Akane
Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
December 11, 2018 12:25 ET (17:25 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Apple (NASDAQ:AAPL)
Historical Stock Chart
From Apr 2024 to May 2024
Apple (NASDAQ:AAPL)
Historical Stock Chart
From May 2023 to May 2024