U.S. stock markets eked out a small win Monday despite investors being on edge because of the U.S.-China trade dispute and Britain’s heightening Brexit crisis.
Markets were also initially dragged lower by banks and Apple. The iPhone maker was ordered by a Chinese court to stop selling some of its late-model phones in the country after a ruling that it had infringed on patents held by Qualcomm.
In a grim turn in morning trading, the Dow Jones industrial average dropped more than 500 points, or 2%, seemingly on track for its second straight rout. By day’s end, however, it had climbed back into positive territory and closed up 34.31 points, or 0.1%, to 24,423.26.
The Standard & Poor’s 500 index finished up 4.64 points, or 0.2%, to 2,637.72, and the Nasdaq composite rose 51.27 points, or 0.7%, to 7,020.52.
Stocks were whipsawed, first driven down by the news British Prime Minister Theresa May was putting off a key parliamentary vote on her country’s exit from the European Union. Kenny Polcari of ButcherJoseph Asset Management said the latest brouhaha piles onto the worries that have beset markets in recent weeks.
“The market has been focusing on all the negative stories,” Polcari said. “As long as the tone is negative, any negative story is going to cause a market overreaction. Brexit is certainly one of them. All of a sudden, Brexit has a real speed bump.”
The lows came about 11 a.m., but the market began lifting in the early afternoon. Technology stocks followed Apple, which started the day in a funk, and then rallied higher around noon. By the end, Facebook shares were up nearly 3% to $141.85, Microsoft rose 2.6% to $107.59 and Intel gained 2.1% to $47.21.
“The turnaround was a result of bargain hunters finally starting to sniff around and pick up some attractive buys, particularly in the tech space,” said Kristina Hooper, global market strategist at Invesco. “Tech is particularly popular because it has fallen so much” in recent months.
Daniel P. Wiener, chairman of Adviser Investments in Newton, Mass., said the market is being moved by day traders responding to every nuance in the news and the marketplace.
“This is one of those headline moments when it’s easier to sell than it is to think about being an investor,” Wiener said. “Traders respond to every news blip. They are measured on their day-to-day performance. They are affecting this market. Investors have a long-term horizon and look at this relatively significant downturn and consider making purchases.”
Tensions over the U.S.-China trade dispute pitched higher over the weekend too. U.S. Trade Representative Robert E. Lighthizer said Sunday on CBS’s “Face the Nation” that March 1 is “a hard deadline” to reach a deal.
“The way this is set up is that at the end of 90 days, these tariffs will be raised,” he said. “If [a deal] can be done, the president wants us to do it. If not, we’ll have tariffs.”
Another flashpoint in the U.S.-China trade relationship was the arrest last week of Meng Wanzhou, chief financial officer of China’s Huawei Technologies. Meng was detained Dec. 1 in Vancouver, Canada. The United States wants to extradite Meng on charges of violating U.S. sanctions on Iran.
Lighthizer attempted to separate the trade debate from the arrest, calling it “a criminal-justice matter.” Yet it has still darkened the cloud over trade talks.
China has demanded Meng’s release and summoned U.S. Ambassador Terry Branstad to Beijing to register its unhappiness with the arrest. The Chinese government also has threatened “further actions” on the matter, according to a posting on a Chinese government website.
Bank stocks were also dropping Monday on weekend reports out of China that showed November exports and imports were below expectations. Soft trade could signal weaker global economic growth.
Asian and Australian banks were down on the news of China’s weaker trade, and the same fears were felt in the U.S. banking sector. The financial sector of the S&P 500 was among the hardest-hit Monday, down 2.8% at noon.
JPMorgan Chase was down 1.9% to $101.36 on Monday, and American Express fell 0.8% to $105.79.
Stocks were also dragged lower by energy, which fell 3.4% after oil prices kept up their months-long decline. The global market is awash in oil, which has sent prices on a 30% swoon since October.
U.S. crude oil was down more than 3% on Monday, despite an agreement Friday between the Organization of the Petroleum Exporting Countries and non-OPEC allies, including Russia, to cap production in an effort to stabilize prices.
In Britain, May’s announcement has thrown her government into disarray just months before the British are scheduled to leave the European Union. Uncertainty surrounding Britain’s exit has roiled the economies of Europe and Britain.
The crisis has punished the British pound, which dropped 1.8% on Monday to the currency’s lowest level since April 2017. It is closer to parity with the dollar, trading at $1.25 to a pound.