U.S. stocks posted a mixed finish Tuesday as doubts about the extent of import tariff reductions in a trade deal with China saw equities retreat from fresh intraday records for the benchmark indexes.
All three major indexes had rallied to intraday records in earlier trade as earnings season got under way.
What did major indexes do?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.62% closed up 32.62 points, or 0.1%, at 28,939.67 while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.54% lost 4.98 points, or 0.2%, to finish at 3,283.15. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +1.12% ended with a loss of 22.60 points, or 0.2%, at 9,251.33.
During the session, the Dow posted a fresh intraday record of 29,054.16, as did the S&P 500 at 3,294.25 and the Nasdaq at 9298.33.
What drove the market?
As part of a U.S.-China trade deal, expected to be signed in Washington on Wednesday, China will pledge to buy $200 billion of U.S. goods over a two-year period in four industries, according to several reports , in return for a lowering of U.S. import tariffs.
However, a Bloomberg report Tuesday afternoon said existing tariffs on Chinese imports would likely stay in place until after the U.S. elections in November and any reduction would depend on Chinese compliance with the terms of the accord.
Earlier stocks were boosted by strong earnings reports from JPMorgan Chase & Co. /zigman2/quotes/205971034/composite JPM +3.89% and Citigroup Inc. /zigman2/quotes/207741460/composite C +5.22% . JPMorgan Chase Chief Executive James Dimon cited a healthy U.S. consumer as a factor that helped it surpass forecasts, along with a stabilization of economic growth and easing tensions over trade policy between the U.S. and China.
However, according to FactSet, overall S&P 500 index company earnings are estimated to have declined 2% in the latest quarter.
“I would be less concerned with the outlook if the market’s 2019 advance was earnings derived,” said Doug Kass, president of Seabreeze Partners Management. “It was not — like in 2013 it was entirely based on a reset of higher valuations (from a PE of 14.5x at year-end 2018 to approximately 19.0x at year-end 2019).
“In 2020, the surprise would be that the “everything bubble” (in which every asset class advanced) is pierced and the notion of mean reversion of returns finally surfaces (just when no one is looking),” Kass said, in a note.