Stocks shook off an early wobble and headed higher in midday trading on Monday, the latest turn for a market that has suddenly become prone to quick moves not only day to day but also hour to hour. The volatility comes as investors question whether a global trade war may be on the way and how quickly interest rates will rise.
KEEPING SCORE: The Standard & Poor’s 500 index was up 19 points, or 0.7 percent, at 2,711 as of 12:35 p.m. Eastern time. It had been down as much as 0.6 percent earlier.
The Dow Jones industrial average was up 187 points, or 0.8 percent, to 24,722, and the Nasdaq composite rose 55 points, or 0.8 percent, to 7,312.
VOLATILE RIDE: From its low point of the day to its high, the S&P 500 carried investors through a swing of 1.5 percentage points, and it’s the fifth straight day that’s happened. Trading has been much wilder than it was during the market’s remarkably placid, record-setting run from 2017 into January. During that period, the typical day saw the S&P 500 drift just 0.5 percentage points from its low point to its high.
TRADE WORRIES: The most recent trigger for wild swings was President Donald Trump’s promise last week to impose stiff tariffs on imports of steel and aluminum, which investors fear could lead to an escalating trade war that halts a global economy finally growing in sync.
Pres. Trump took again to Twitter on Monday to defend the tariffs, which have riled trading partners around the world and already triggered threats of retaliation. Pres. Trump highlighted trade deficits with Canada and Mexico, and he said tariffs “will only come off if” a new free-trade agreement between the three countries is signed.
Investors have been questioning whether Pres. Trump’s initial promise would prove to be just an opening bid in negotiations, with the actual move being less consequential. Stocks pared sharp losses on Friday amid such speculation.
On Monday, House Speaker Paul Ryan urged the White House “not to advance with this plan” and is “extremely worried about the consequences,” according to a statement issued by his office.
If a trade war does happen, it could put profits for big U.S. companies at risk because they are heavily reliant on the global economy. Companies in the S&P 500 got 43 percent of their sales from outside the United States in 2016, according to S&P Dow Jones Indices. If countries throw up barriers blocking U.S. companies from those customers, it would undercut what had been encouraging sales growth.
INSURANCE FIRST: XL Group jumped to the biggest gain in the S&P 500 after AXA said that it will acquire the insurance and reinsurance company for $15.3 billion in cash. Investors will get $57.60 per XL Group share, and its stock surged $12.44, or 28.7 percent, to $55.74.
DIVIDENDS RISE: Some of the biggest gains went to stocks that pay big dividends. Real-estate stocks rose 1.5 percent for the largest gain among the 11 sectors that make up the index. Utilities, which are also big dividend payers, gained 1.3 percent.
Those stocks got an earlier boost from falling bond yields, which make the dividends that they pay more attractive to investors seeking income. The yield on the 10-year Treasury held steady at 2.87 percent after dropping to 2.84 percent shortly after U.S. stock markets opened.
MIXED GLOBAL MARKETS: European markets were mostly higher, with Italy an exception after elections there saw no single party emerge with a majority in Parliament. That raises uncertainty about how closely Italy will work with the rest of the European Union.
France’s CAC 40 rose 0.6 percent, Germany’s DAX gained 1.5 percent and the FTSE 100 was up 0.7 percent in London.
In Asia, Japan’s Nikkei 225 fell 0.7 percent, South Korea’s Kospi dropped 1.1 percent and the Hang Seng in Hong Kong lost 2.3 percent.
Stocks in Shanghai edged up after Beijing set an annual growth target for the world’s No. 2 economy of “around 6.5 percent” for 2018. That’s down from 6.9 percent last year, but still robust.
COMMODITIES: Benchmark U.S. crude rose $1.26 to $62.51 per barrel. Brent crude, the international standard, rose $1.27 to $65.64 a barrel.
Gold fell $2.80 to $1,320.60 per ounce.
CURRENCIES: The dollar rose to 105.86 Japanese yen from 105.54 yen late Friday. The euro dipped to $1.2326 from $1.2331, and the British pound climbed to $1.3837 from $1.3790.