U.S. Stocks Tread Water
Investors weigh update on trade and look ahead to Friday’s jobs report
Avantika Chilkoti
Updated March 6, 2019 9:46 a.m. ET
The Dow Jones Industrial Average edged up 11 points, or less than 0.1%, to 25818. The S&P 500 also inched up less than 0.1%. Both benchmarks fell in consecutive sessions to start the week, though they remain up 11% for the year. The tech-heavy Nasdaq Composite dipped less than 0.1%.
Stocks have pared a sliver of their powerful 2019 recovery this week as investors weigh the latest economic data points. While steady U.S. growth figures have reinforced confidence in the nearly 10-year-old expansion, some analysts are worried that the data could push the Federal Reserve to raise interest rates later in the year.
China’s lead trade negotiator, Liu He, right, with U.S. Trade Representative Robert Lighthizer in Beijing on Feb. 14.
China’s lead trade negotiator, Liu He, right, with U.S. Trade Representative Robert Lighthizer in Beijing on Feb. 14. Photo: MARK SCHIEFELBEIN/AGENCE FRANCE-PRESSE/GETTY IMAGES
Cautious signals from the Fed and robust hiring data have buoyed stocks so far this year. But uncertainty about the outcome of ongoing trade negotiations is also looming over markets, with some analysts suggesting much of the optimistic news has already been factored in. China and the U.S. are in the final stage of completing a trade deal, The Wall Street Journal reported Sunday.
While a compromise could boost the outlook for the global economy, some analysts are wary that it could also give the Fed more leeway to get more aggressive with rates moving forward.
Peter Heilbron, senior investment officer at Northern Trust Wealth Management, said U.S. data has been a “mixed bag” of late as the effects of President Trump’s tax policies fade.
While many analysts have praised the central bank’s patience, Mr. Heilbron flagged concerns that the economy could “overheat” with such accommodative policy, and said, “Does that virtue turn into vice as we move forward?”
Figures Wednesday showed the U.S. posted its widest monthly trade gap since 2008 in December and a record annual deficit in goods as sturdy economic growth underpinned higher spending by American consumers and businesses.
Economists will be monitoring inflation signals in the coming days, including wage growth figures in Friday’s jobs report, as many have said muted increases in consumer prices could keep the Fed from raising rates.
The U.S. private sector added 183,000 jobs in February, although the gains were smaller than expected as job creation slowed from a strong performance in January, the latest ADP report showed Wednesday.
The yield on the benchmark 10-year U.S. Treasury note edged down to 2.713%, according to Tradeweb, from 2.722% a day earlier. Bond yields fall as prices rise.
With risk assets surging to start the year, some analysts expect disagreements preventing a U.S.-China trade deal to also keep major indexes contained in their current trading ranges.
“It is hard to say when and how it is going to be resolved because obviously it’s not just about simple things related to cars and things like that, it’s more about intellectual property,” said Anna Stupnytska, global economist at Fidelity International.
Investors were weighing the latest batch of retail earnings reports Wednesday.
Dollar Tree shares rose 0.7% after the company sharply marked down the value of its Family Dollar chain and announced plans to close nearly 400 Family Dollar stores and rebrand hundreds of others this year.
Abercrombie & Fitch , Ross Stores and Urban Outfitters also climbed following their latest results.
Elsewhere, the Stoxx Europe 600 edged up 0.2%, with Brexit negotiations dragging on with just weeks to go before the deadline for the U.K. to leave the European Union.
Newsletter Sign-up
Japan’s Nikkei Stock Average edged down 0.6%, while the Shanghai Composite rose 1.6% to extend a recent winning streak. Hong Kong’s Hang Seng Index ended up 0.3%.
—Amrith Ramkumar contributed to this article.
Write to Avantika Chilkoti at
Avantika.Chilkoti@wsj.com