Published On: Thu, Apr 4th, 2019

S&P wavers with U.S.-China trade talks in focus

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FILE PHOTO:  Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York
FILE PHOTO: Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., April 2, 2019. REUTERS/Lucas Jackson/File Photo

April 4, 2019

By Sruthi Shankar and Shreyashi Sanyal

(Reuters) – The S&P 500 swung between gains and losses on Thursday, but held near six-month highs with support from Boeing Co and Facebook Inc, as investors waited for more clarity on the U.S.-China trade talks.

Negotiations continued in Washington after meetings last week in Beijing, as the two countries worked toward resolving their long-standing trade dispute which has cast a shadow over global economic growth.

President Donald Trump is set to meet Vice Premier Liu He, who is leading the Chinese side in the talks later on Thursday.

“The fundamentals are strong enough and the trade talks are offering an added support to the sentiment,” said Kevin Miller, chief investment officer at E-Valuator Funds in Minneapolis, Minnesota.

“I do expect that the U.S. will get a trade agreement signed with China and that is going to obviously elevate markets.”

Hopes of a trade deal have driven the S&P 500 to a strong start since the beginning of the quarter and it has closed higher all of this week. The index is near its highest since Oct. 10 and less than 2% away from hitting an all-time high.

However, worries about a global slowdown sapped some enthusiasm. Earlier, data showed German industrial orders in February fell at their sharpest rate in more than two years.

That followed disappointing U.S. services sector activity and private payrolls data on Wednesday. Investors will get a clearer picture of the strength in the labor market when the non-farm payrolls report comes out on Friday.

At 11:47 a.m. ET the Dow Jones Industrial Average was up 153.30 points, or 0.58%, at 26,371.43, the S&P 500 was up 2.65 points, or 0.09%, at 2,876.05 and the Nasdaq Composite was down 10.39 points, or 0.13%, at 7,885.16.

The Nasdaq was pressured by a fall in the shares of Microsoft Corp and Tesla Inc.

Tesla tumbled 7.57% after the electric carmaker’s deliveries fell 31% in the first quarter on challenges in shipping to Europe and China.

Seven of the 11 major S&P sectors were higher. The technology sector fell 0.55% and was set to snap a five-day winning streak.

Facebook rose 2%, lifting the communication services sector by 0.68%, after brokerage Guggenheim upgraded the social media company’s stock to “buy” from “neutral”.

Boeing rose 2.81%, contributing the most to gains on the Dow and the S&P industrial index, which rose 0.61%.

Morgan Stanley analyst Rajeev Lalwani said the initial data from Ethiopian investigators indicated that the flight control system of the 737 MAX jet was the issue, which potentially took a worst case scenario off the table of an entirely new cause. Ethiopia urged the planemaker to review its flight control technology in the first public findings on the crash.

Advancing issues outnumbered decliners for a 1.50-to-1 ratio on the NYSE and a 1.25-to-1 ratio on the Nasdaq.

The S&P index recorded 16 new 52-week highs and one new low, while the Nasdaq recorded 36 new highs and 22 new lows.

(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)

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