U.S. stocks veered between small gains and losses in late-afternoon trading Monday as Wall Street nears the end of a relatively strong earnings season and looks ahead to key trade talks between the U.S. and China.
Gains in industrial, energy and retail companies outweighed losses in communications and health care stocks. Small-company stocks fared better than the rest of the market.
U.S. Treasury Secretary Stephen Mnuchin is leading a delegation set to meet with Chinese officials on Thursday and Friday. The talks are aimed at resolving a trade war that threatens to stunt global economic growth, in part by raising prices on goods for consumers and companies. The situation could get worse when a truce on tariffs expires in early March.
Economists’ fears of a global slowdown were given additional fuel from a report Monday showing Britain’s economy had its slowest economic growth since the aftermath of the global financial crisis. Both Europe overall and China are contending with slower growth.
Corporate earnings are so far mixed on a light day for reporting. Restaurant Brands, the owner of Tim Horton’s and Burger King, jumped after reporting strong earnings results. Commercial insurer Loews plunged on a fourth-quarter loss caused by higher catastrophe losses.
So far, 66.4 percent of companies in the S&P 500 have reported earnings, with 69 percent beating analysts’ forecasts. Earnings growth came in at 14.5 percent for the quarter. But some companies have tempered their outlooks and analysts currently expect a 2 percent contraction in the first quarter.
Looking ahead, beverage and consumer product giants Coca-Cola and Nestle will report earnings this week.
KEEPING SCORE: The Dow Jones Industrial Average fell 68 points, or 0.3 percent, to 25,037 as of 3:21 p.m. Eastern time. The S&P 500 index was flat, while the Nasdaq composite rose 0.1 percent. The Russell 2000 index of smaller-company stocks gained 0.5 percent. European markets finished higher.
THE QUOTE: Investors were in a wait-and-see mode while keeping an eye on the U.S.-China trade talks, the negotiations in Washington ahead of another possible government shutdown and the wrangling over the terms of Britain’s departure from the European Union, said Sam Stovall, chief investment strategist at CFRA.
“Game day is almost at hand for all three issues,” Stovall said, noting that the outcome of the trade talks between Washington and Beijing are likely to have the biggest impact on the market.
“The problem is, if this trade issue goes on long enough, it will metastasize itself to our economy,” he said.
COFFEE, EH?: A surge in sales at Tim Hortons helped parent company Restaurant Brands gain ground on the market. Profit at the company, which also operates Burger King, beat Wall Street forecasts. The stock added 2.2 percent.
BURRITO BIO-PIC: Chipotle hired documentary filmmaker Errol Morris to create ads showcasing its kitchens, prep routines and partners. Morris is the director of the Oscar-winning documentary “Fog of War”.
The Mexican-food chain is still rehabilitating its image years after a series of food-borne illnesses scared away customers and drove sales lower.
The stock climbed 3.4 percent.
FEEL THE SURGE: Shares of Tesla rose 2.5 percent. Canaccord upgraded the stock from “Hold” to “Buy” and wrote in a note that results for the last two quarters and Tesla’s outlook have removed “significant concerns” for Model 3 production and profitability.
Also, LMC Automotive estimated that the Model 3 was the top-selling luxury car in the U.S. last year, outselling the Lexus ES by more than two to one.
TAKING A HIT: Loews slid 5.7 percent after the commercial insurer booked a fourth-quarter loss due to higher catastrophe losses.
NOT PLAYING: Activision Blizzard shares sank 7.8 percent following a Bloomberg report saying the video game company plans to announce layoffs on Tuesday, when it’s scheduled to report quarterly results. The report, which Bloomberg posted late Friday, cited unnamed people familiar with the matter.
Shares in rivals Take-Two Interactive and Electronic Arts took a beating last week after the companies gave investors a weak outlook for the current quarter.
On Monday, Take-Two slid 4.1 percent. But Electronic Arts, which recovered Friday on strong sales of a new game, gained another 0.7 percent.
OIL: U.S. benchmark crude fell 0.6 percent to settle at $52.41 per barrel in New York. Brent crude, the standard for international oil prices, dropped 1 percent to close at $61.51 per barrel in London.
In other energy futures trading, wholesale gasoline slid 1.9 percent to $1.42 a gallon. Heating oil declined 0.8 percent to $1.89 a gallon. Natural gas rose 2.3 percent to $2.64 per 1,000 cubic feet.
BOND YIELDS: Bond prices fell. The yield on the 10-year Treasury rose to 2.66 percent from 2.63 percent late Friday.
CURRENCIES: The dollar rose to 110.40 yen from 109.77 yen on Friday. The euro weakened to $1.1278 from $1.1324.
METALS: Gold fell 0.5 percent to $1,311.90 an ounce. Silver lost 0.8 percent to $15.69 an ounce. Copper dropped 0.7 percent to $2.79 a pound.
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