U.S. Stocks Mixed on Trade Optimism, Economic Concerns
December 13 2018 - 1:25PM
Dow Jones News
By Avantika Chilkoti and Jessica Menton
U.S. stocks flipped between small gains and losses Thursday as
investors weighed signs of improving trade relations between the
U.S. and China, along with concerns about a creeping economic
slowdown.
The Dow Jones Industrial Average was up 70 points, or 0.3%, to
24590 in afternoon trading. The S&P 500 fell less than 0.1%,
after ending higher two of the past three trading days. The
technology-heavy Nasdaq Composite lost 0.4%. All three major
indexes are on course to end the week higher.
Broad losses in consumer-discretionary, communication-services
and materials shares weighed on the S&P 500. Meanwhile,
defensive-oriented stocks, such as real estate and utilities, added
about 1%. Trade-sensitive shares also rose, with Dow component
Caterpillar climbing nearly 1%.
Thursday's mixed trading session came after U.S. stocks
rebounded Wednesday as The Wall Street Journal reported that China
was set to introduce an industrial policy that is friendlier to
foreign businesses. President Trump said on Twitter earlier in the
week that "productive" trade talks were under way.
Still, investors remain skittish about how long the U.S. economy
can continue to grow. Some analysts said the absence of major
headlines this week has helped drive stock gains, but have also
created more noise and uncertainty in markets.
"We've had a few surprising rallies this week, but it certainly
doesn't feel that way," said Willie Delwiche, an investment
strategist at Baird, referring to big intraday swings on Monday and
Tuesday that rattled investors.
Mr. Delwiche cautioned that investors are likely too optimistic
that the Federal Reserve will strike a more dovish tone following
its meeting next week.
Economists surveyed by The Wall Street Journal expect the Fed to
raise its benchmark federal-funds rate to a range of 2.25% to 2.5%.
But they dialed back their median forecast for a rise in borrowing
costs in 2019, calling for two rate increases next year rather than
the three they expected when surveyed last month.
"I don't think the Fed will want to be seen as a hostage to the
stock market," Mr. Delwiche said. "Officials might be willing to
stick to their guns in terms of their expected rate hikes a little
bit more than the market anticipates right now, and that would
bring more volatility."
In Thursday's action, shares of General Electric jumped nearly
8% after JPMorgan Chase upgraded the stock to neutral from
underweight. Separately, the struggling conglomerate reached a deal
to sell off part of its GE Digital business and set aside the rest
in a separate company focused on industrial Internet of Things
software. Shares of the company have lost more than half of their
value in 2018.
On the earnings front, Ciena topped Wall Street earnings and
revenue estimates, sending shares of the networking-equipment maker
more than 8.5% higher. Tailored Brands, the parent of apparel chain
Jos. A. Bank, plunged 30% after the company late Wednesday lowered
its guidance due to weak sales at Men's Wearhouse.
Meanwhile, the European Central Bank confirmed it would phase
out its bond-buying program amid rising concerns about global
growth.
"I think markets are nervously trying to rebuild some kind of
confidence here, though they remain quite edgy," said Paul
O'Connor, head of the U.K. multiasset team at Janus Henderson,
pointing to dovish comments from the U.S. Federal Reserve and
easing trade tensions. "The immediate concern is probably focused
on the ECB, but I think a more positive broader theme has
emerged."
The Stoxx Europe 600 fell 0.2% after British Prime Minister
Theresa May on Wednesday survived a vote of no confidence triggered
by rebel members of her Conservative Party.
Though the vote erases the threat of another leadership
challenge for a year, analysts say it has weakened Mrs. May's
authority and delayed negotiations over the Brexit deal.
In Asia, Japan's Nikkei Stock Average rose 1%, while Hong Kong's
Hang Seng Index gained 1.3%.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and
Jessica Menton at Jessica.Menton@wsj.com
(END) Dow Jones Newswires
December 13, 2018 13:10 ET (18:10 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.