U.S. stocks closed mixed Wednesday, after seeing record highs in recent days, as markets weighed a report that an interim China-U.S. trade deal could be delayed until December and weakness in the energy sector underscored by disappointing corporate quarterly results.
How did major benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.78% lost less than a point to end at 27,492.50, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.59% gained 2.16 points, or 0.07%, at 3,076.78. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +2.21% shed 24.05 points, 0.29%, closing at 8,410.63.
On Tuesday, the Dow /zigman2/quotes/210598065/realtime DJIA +1.78% rose 30.52 points, or 0.1%, at 27,492.63, surpassing its previous record, set on Monday. The Nasdaq /zigman2/quotes/210598365/realtime COMP +2.21% edged 1.48 points higher to reach 8,434.68, a gain of less than 0.1%, also notching a second consecutive record close. The S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.59% , meanwhile, edged 3.60 points lower, or 0.1% to end the day at 3,074.67.
The Dow’s year-to-date gain now stands at nearly 18% after rallying 3.3% in the past month. The S&P 500 is up more than 22% this year after surging 4% in the past month.
What’s drove the market?
Investors digested a report from Reuters that said a long-awaited interim trade deal between the U.S. and China could be delayed until December as discussions continue between the world’s two-largest trading partners about terms and a venue for a meeting.
From the U.S. side, there still was optimism that an agreement could be reached with China on the first segment of trade issues up for discussion.
“Negotiations are continuing and progress is being made on the text of the phase-one agreement. We will let you know when we have an announcement on a signing location,” said Judd Deere, White House spokesman.
Even so, stocks were struggling to find a catalyst to move beyond recent all-time highs.
“We’ve been rallying on the anticipation of a trade deal and the Reuters news report has caused a slight pullback,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group, in an interview.
“The market may take a breather from here,” Boockvar told MarketWatch, noting that market sentiment has gotten extremely bullish on the back of last week’s Federal Reserve interest rate cut and on optimism about the prospects for a coming trade truce. “If we don’t get a deal, that’s a different story,” he said.
A preliminary, or “Phase One” trade deal between China and the U.S. is still a hope, but some strategists worry that the market may be placing too much emphasis on a deal coming to fruition soon.
“The market has taken an overly optimistic view on the Phase One deal, nudged on by better US economic data of late,” wrote Stephen Innes, market strategist at AxiTrader. “So, with delay comes chance that risk-on sentiment has too long to ferment, stalls and then maybe reverses as the waiting game weighs,” he said.
Also on the trade front, Reuters reported that China’s state-owned agriculture conglomerate COFCO struck a deal to buy $100 million of pork next year from European producer Danish Crown, a potential blow to American hog supplies that fueled a near 4% drop in December lean hog futures.
With the U.S. corporate earnings reporting season winding down, FactSet data indicates that 75% of S&P 500 companies to report thus far have topped analysts’ expectations.