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U.S. Stocks Turn Positive as Investors Weigh Trade Progress

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05/17/2019 | 09:31am EDT

By Will Horner

U.S. stocks picked up momentum Friday despite continued uncertainty over trade negotiations between Washington and Beijing.

The Dow Jones Industrial Average rose 83 points, or 0.3%, to 25943. The S&P 500 added 0.3% and the technology-heavy Nasdaq Composite advanced 0.2%. All three major indexes are roughly flat for the week. If the Dow industrials decline for the week, it would be their fourth straight week of losses.

The S&P 500 rose despite drops in trade-sensitive industrial shares. Shares of Caterpillar fell 1.1%.

U.S. stocks pared earlier losses in morning trading after the Trump administration said Friday it would put off for 180 days a final decision on whether to impose broad tariffs on automobile and auto-part imports. At its low point on the day, the Dow was off about 200 points.

Investors continue to focus on comments from Washington and Beijing after new U.S. tariffs marked a re-escalation of trade tensions and upended hopes the dispute was nearing a conclusion.

On Thursday, China's Commerce Ministry contradicted comments from Treasury Secretary Steven Mnuchin that U.S. negotiators will hold further talks in Beijing at "some point in the near future."

A Chinese spokesman said China "doesn't have a grasp on the U.S. side's plans to come to China for negotiations." He then said the U.S.'s escalation of tariffs had "severely hampered" talks.

"The resurgent trade war is shaking markets," said David Folkerts-Landau, Group Chief Economist at Deutsche Bank, adding that further tariffs would prompt a large market correction. "There is also the possibility of further escalation by the U.S. or a more combustible retaliation from China, either of which would further inflame tensions and elevate risks."

Investors also worried that Beijing could target U.S. tech companies in China after President Trump signed an executive order banning Chinese telecommunications firms.

"President Trump's latest executive order is more important than the current trade tussle in the medium to longer term" because of its potential impact on Chinese growth, said Geoffrey Yu, head of the U.K. Investment Office at UBS Wealth Management.

"Technological advancement and accessing more markets for its companies has been a priority strategic goal for China, but this could now be severely limited," he added.

In Friday's action, shares of Deere fell 3.7% after the company lowered its guidance for profit and equipment sales for the current fiscal year as its customers continue to face headwinds in the agriculture industry.

The yield on the benchmark 10-year Treasury note fell to 2.385% Friday from 2.407% Thursday. The WSJ Dollar Index, which tracks the dollar against a basket of currencies, was flat.

The British pound has fallen against the dollar for five-straight sessions amid growing Brexit uncertainty. It was last down 0.3% at $1.2766. Trade tensions also prompted a slide in the Chinese yuan, which fell 0.4% against the dollar.

In commodities markets, Brent crude oil rose 0.5% to $72.94 a barrel, while gold was flat at $1,286.74 an ounce.

Elsewhere, the pan-continental Stoxx Europe 600 fell 0.7%. Chinese indexes led Asian markets lower, with the Shanghai Composite falling 2.5% and Hong Kong's Hang Seng falling 1.1%. Japan's Nikkei bucked the trend with a rise of 0.9%.

--Jessica Menton contributed to this article.

Stocks mentioned in the article
ChangeLast1st jan.
CHINA-SHANGHAI COMP 0.50% 2954.38 End-of-day quote.18.28%
DJ INDUSTRIAL -0.15% 26788.1 Delayed Quote.14.84%
HANG SENG -0.82% 26532.35 Real-time Quote.3.50%
NASDAQ 100 -0.83% 7874.615602 Delayed Quote.24.31%
NASDAQ COMP. -0.72% 8104.295257 Delayed Quote.21.92%
NIKKEI 225 0.34% 22625.38 Real-time Quote.12.38%
S&P 500 -0.36% 2995.99 Delayed Quote.19.51%
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) -0.04% 7.0732 Delayed Quote.2.90%
US DOLLAR INDEX 0.21% 97.53 End-of-day quote.0.87%
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