Wall Street flat as US-China trade deal optimism fades | Money

People walk on Wall Street in front of the New York Stock Exchange (NYSE) in New York February 6, 2018. ― Reuters pic
People walk on Wall Street in front of the New York Stock Exchange (NYSE) in New York February 6, 2018. ― Reuters pic

NEW YORK, Oct 14 — US stocks halted a three-day winning streak today, as oil prices dived 2 per cent and rising doubts over how quickly a partial US-China trade deal announced on Friday could be sealed.

Energy majors such as Exxon Mobil Corp and Chevron Corp were the biggest drags on the S&P 500 index, as oil prices gave up last week’s gains following caution around the trade deal.

The S&P 500 and Dow Jones indexes had ended Friday with their first weekly gain in a month after Washington signalled the two sides had taken a major step in easing the tit-for-tat measures that have hammered global growth this year.

Trump, however, acknowledged the agreement could still collapse and a handful of media reports and comments from Treasury Secretary Steven Mnuchin left investors feeling less upbeat about what had really been achieved.

Mnuchin said in a CNBC interview that he had “every expectation” that if a US-China trade deal was not in place by December 15, additional tariffs would be imposed, although he said he expected a deal to be agreed by then.

Shares of companies with a sizeable exposure to China, including Nvidia Corp, Advanced Micro Devices Inc and Micron Technology Inc, slipped slightly in early trading after gaining on Friday. The Philadelphia Semiconductor index was off 0.3 per cent.

“It’s more of the fact that it was a handshake deal,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“On Friday, we closed off the highs of the day as investors began to realize that while on the surface this is good news, there’s no substance to the deal just yet.”

At 10am ET, the Dow Jones Industrial Average was up 6.03 points, or 0.02 per cent, at 26,822.62, while the S&P 500 was down 2.35 points, or 0.08 per cent, at 2,967.92. The Nasdaq Composite was down 7.78 points, or 0.10 per cent, at 8,049.26.

Investors will now be looking at third-quarter earnings to gauge the impact of the trade conflict and a sluggish domestic economy on corporate America.

The reporting season kicks off on Tuesday, with the biggest US banks expected to report a 1.2 per cent decline in earnings due to falling interest rates, a raft of unsuccessful stock market flotation and trade tensions.

Citigroup Inc, Goldman Sachs Group Inc and Wells Fargo & Co were down between 0.1 per cent and 0.4 per cent. The S&P 500 bank index had logged its best day in a month on Friday.

Overall, analysts are forecasting a 3.2 per cent decline in profit for S&P 500 companies for the quarter from a year earlier, based on IBES data from Refinitiv.

Fastenal Co was down 1 per cent after two brokerages downgraded the stock. The company had logged its best day in three decades on Friday after reporting strong results.

Nike Inc was the top gainer on the Dow Jones index after Bank of America Merrill Lynch upgraded the stock to “neutral” from “underperform”.

Shares of US construction and engineering company AECOM rose 5.6 per cent after it agreed to sell its management services unit to private equity firms for about US$2.4 billion (RM10 billion).

Declining issues outnumbered advancers for a 2.08-to-1 ratio on the NYSE and for a 2.07-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and two new lows, while the Nasdaq recorded nine new highs and 51 new lows. — Reuters

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