The surging price of oil lifted energy stocks on Wednesday, but other areas of the market faltered. After zooming higher in the morning, a slump in technology stocks helped drag U.S. indexes to modest losses in the afternoon.
It’s yet another example of markets pirouetting quickly in recent weeks, even by the hour, as investors gauge how seriously to take the prospect of a global trade war. Asian stocks slumped early due to the concerns about trade, only for European stocks to flip from losses to gains on hopes the Trump administration was taking a less combative stance in talks with China. U.S. stocks opened higher, but the gains evaporated after a White House adviser said the move shouldn’t necessarily be considered a signal of a softer stance.
KEEPING SCORE: The S&P 500 was down 7 points, or 0.3 percent at 2,715, as of 2:25 p.m., Eastern time. It erased an earlier gain of as much as 0.8 percent.
The Dow Jones Industrial Average fell 33 points, or 0.1 percent, to 24,249, and the Nasdaq composite sank 61 points, or 0.8 percent, to 7,500.
TRADE WORRIES: Stocks have swung in recent weeks as talks have grown more and less heated about trade between the United States and its partners, particularly China.
U.S. stocks rose at the open of trading after the Trump administration indicated it’s shifting away from a plan to impose limits on Chinese investment in U.S. technology companies and high-tech exports to China. Instead, the administration is calling on Congress to enhance an existing review process.
Investors took it as a sign of a less antagonistic stance after escalating rounds of tough talk, but the gains disappeared in the afternoon. Larry Kudlow, director of the National Economic Council, said in an interview with Fox Business that it should not necessarily be viewed as a softer stance.
“Trade is the hot topic du jour, and it’s having an impact on the market” said Barry Bannister, head of institutional equity strategy at Stifel.
It’s only adding to pressures that have been mounting on the market, which he sees dropping over the next three months. Interest rates are rising, but more importantly to Bannister, so have interest rates after accounting for the effects of inflation. That is putting pressure on stock prices, and he expects this bull market that began in 2009 to end by the first quarter of 2020.
CHINESE BEARS: The tough talk on trade between the world’s two largest economies has hit Chinese stocks particularly hard, and China’s Shanghai Composite index continued to plummet with a 1 .1 percent drop on Wednesday. It’s down more than 20 percent from its late January level.
“To a large extent, the Chinese market is one driven by speculation,” said Jingyi Pan, a market strategist at IG in Singapore. “With sentiment rolling over itself of late, particularly over the escalating trade tensions that seem to have no end, it should be of little surprise to find the market crumbling.”
ENERGIZED STOCKS: The price of crude jumped after a report showed that U.S. oil inventories dropped more sharply last week. Crude’s price had already been rising on reports that the Trump administration is pushing other countries to stop importing oil from Iran.
That helped drive energy stocks in the S&P 500 up 1.6 percent. That was more than double the gain for any of the other 10 sectors that make up the index.
Concho Resources, a company that looks for oil and gas in New Mexico and west Texas, jumped 5.5 percent to $138.87. Hess gained 3.3 percent to $65.90
MARKETS ABROAD: European stocks erased earlier losses to climb. France’s CAC 40 gained 0.9 percent, Germany’s DAX rose 0.3 percent and the FTSE 100 in London added 1.1 percent.
Asian markets, which closed earlier, mostly fell. Japan’s Nikkei 225 lost 0.3 percent, and South Korea’s Kospi sank 0.4 percent.
FILLING UP: Conagra Brands recorded the biggest loss among stocks in the S&P 500 after it agreed to buy Pinnacle Foods, the company behind Duncan Hines and Hungry-Man, in a deal that would create a frozen-food giant. The cash-and-stock bid is valued at more than $8 billion, not including Pinnacle Foods’ debt.
Conagra also reported stronger earnings for the latest quarter than analysts expected. Its shares nevertheless dropped 6.9 percent to $35.60.
CURRENCIES: The dollar edged up to 110.17 Japanese yen from 110.13 yen late Tuesday. The euro fell to $1.1563 from $1.1650, and the British pound dropped to $1.3139 from $1.3232.
YIELDS: The yield on the 10-year Treasury dropped to 2.82 percent from 2.88 percent late Tuesday. The two-year yield fell to 2.48 percent from 2.53 percent, and the 30-year sank to 2.97 percent from 3.02 percent.
COMMODITIES: Benchmark U.S. crude rose $2.18, or 3.1 percent, to $72.71. Brent crude, the international standard, rose $1.36 to $77.50 per barrel.
Gold slipped $3.50 to $1,256.40 per ounce.