By Ben St. Clair and Michael Wursthorn
The S&P 500 drifted between small gains and losses Thursday, as the latest round of corporate earnings reports offered some support to a stock market reckoning with yet another trade volley.
The broad index struggled to move higher most of the morning, even after shares of several companies, including telecommunications firm CenturyLink and energy drink maker Monster Beverage, gained following upbeat earnings results.
Investors said renewed trade tensions sapped some of the market's enthusiasm after China threatened Wednesday to slap new tariffs various chemicals and medical equipment, among other goods. Beijing released the list of items as part of its promise to keep pace with the U.S.'s trade threats, which caused stocks to sputter Wednesday, snapping a four-session streak of gains for the S&P 500 and Dow industrials.
"We're trying to deal with tariffs, but who knows what [President] Trump could do tomorrow, and we don't know which of our companies are going to be hurt by trade issues," said Charlie Smith, chief investment officer of Fort Pitt Capital Group."But the market is paying attention to whether tariffs are getting ramped up to the point it's hurting S&P earnings."
The trade sparring between Washington, D.C., and Beijing has weighed on the stock market for much of the year so far, and several investors, including Mr. Smith, said the tit-for-tat responses are diluting the benefits of the corporate tax cut Republicans passed last year.
Still, corporate earnings for the second quarter appeared strong. With more than 85% of the companies in the S&P 500 having reported results, the firms have posted 24% growth in profits from a year earlier, according to FactSet. Even though some of those profits have come from the tax overhaul passed last year, the higher profits have helped the S&P 500 move within striking distance of its last record -- set Jan. 26.
The S&P 500 was mostly flat in midday trading, while the Dow Jones Industrial Average slid 45 points, or 0.2%, to 25539. The Nasdaq Composite rose 0.2%.
Shares of CenturyLink rose 12%, putting it among the S&P 500's top performers of the session, after the telecom firm reported earnings above expectations and raised its 2018 guidance.
Energy drink company Monster Beverage, meanwhile, reported higher sales and income in the second quarter, sending shares up more than 2.2%.
Elsewhere, the Stoxx Europe 600 was up less than 0.1%. In Asia, Chinese stocks pushed higher after losses Wednesday, as the Shanghai Composite Index gained 1.8% and the Shenzhen A Share index rose 2.7%. Both indexes are up this week but have seesawed amid the escalating trade dispute between the U.S. and China.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com