The Fed holds its second interest-rate policy meeting of the year
U.S. stocks closed mostly lower Tuesday, with the Dow Jones Industrial Average snapping a four-day winning streak, as investors tried to make sense of a pair of conflicting reports on U.S.-China trade talks.
The Federal Reserve also convened a two-day policy meeting which will conclude Wednesday.
How did the benchmarks fare?
The Dow Jones Industrial Average DJIA, -0.33% shed 26.72 points, or 0.1%, to 25,887.38, while the S&P 500 SPX, -0.25% slipped 0.37 point to 2,832.57. The Nasdaq Composite Index COMP, -0.11% rose 9.47 points, or 0.1%, to 7,723.95.
What drove the market?
A Bloomberg News report that China is pushing back against U.S. demands for concessions in bilateral trade talks dampened market sentiment with major indexes coming off intraday highs. Chinese officials are reportedly indicating that the U.S. has not made sufficient assurances that President Donald Trump’s administration will lift tariffs on Chinese goods in exchange for Beijing agreeing to changes in their intellectual property regulations.
However, the The Wall Street Journal also reported that the two countries are in the final stages of negotiations with U.S. Representative Robert Lighthizer and Secretary of Treasury Steven Mnuchin scheduled to fly to Beijing next week.
Investors are also on standby for the Fed’s policy decision on Wednesday. No changes in rates are expected, but market participants will focus on remarks by Chairman Jerome Powell at his news conference and policy makers’ forecasts of future rate moves.
Of particular interest is whether the Fed will announce plans to bring its balance-sheet runoff effort to an early end.
New orders for American-made goods rose 0.1% in January, the Commerce Department reported. The growth was below the 0.4% increase in factory orders expected by economists polled by MarketWatch, and matches the 0.1% increase in December.
What were analysts saying?
Cliff Hodge, director of investments for Cornerstone Wealth, urged investors to “ignore the headline” following the loss of market’s momentum in the wake of the trade-related headlines.
“With conflicting signals coming from both sides on trade, it is understandable that investors are on edge. Equity markets have rallied from the December lows on positive developments on trade, and a Fed on hold. In our mind, both of these narratives are priced in,” he said. “If something were to change on either front, it would open up the markets to increased volatility in the days and weeks ahead.”
“It’s been a fairly stable trading environment, as the market has largely built in expectations that we’ll get some kind of deal with China and it isn’t anticipating any changes to interest-rate policy from the Fed,” Patrick Healey, president of Caliber Financial Partners, told MarketWatch.
What stocks were in focus?
Shares of Michaels Cos. MIK, -1.33% jumped 8.5%, after the arts-and-crafts retailer reported fiscal fourth-quarter earnings and revenue that surpassed Wall Street expectations, though the company disappointed in its 2019 outlook.
DSW Inc. DSW, -1.54% shares sank 13% after the discount footwear retailerreported fiscal 2018 earnings that fell short of analysts’ forecasts.
Shares of Nvidia Corp. NVDA, +1.32% rose 4% after the company announced that Amazon.com Inc. AMZN, +0.68% would now be using its T4 data-center chips.
Revlon Inc. REV, +0.06% shares slid 6.9% after the cosmetics maker reported unaudited fourth-quarter and 2018 earnings, saying it spotted a “material weakness” in its internal controls over financial reporting for 2018. The company said it would file its 2018 Form 10-K no later than March 29, while saying that financial results aren’t expected to change.
Shares of Chesapeake Energy Corp. CHK, -0.32% rose 0.3% after Raymond James analyst James Freeman raised his target price on the stock from $4 to $4.50.
How are other markets trading?
Asian stocks were muted, with Japan’s Nikkei 225 NIK, +0.20% edging 0.1% lower, China’s Shanghai Composite Index SHCOMP, -0.01% falling 0.2%, and Hong Kong’s Hang Seng Index HSI, -0.49% adding 0.2%.
In Europe, stocks rose with the Stoxx Europe 600 SXXP, -0.60% adding 0.6%.
Crude oil CLJ9, -0.29% turned lower while the price of gold GCJ9, +0.18% settled higher and the U.S. dollar DXY, +0.03% lost ground versus major rivals.