U.S. stocks careened between big gains and modest losses Tuesday before ending the day mixed. The result of Tuesday's trip through the spin cycle belies all the action: Indexes ended the day nearly where they began.
A morning burst driven by hopes for U.S.-China trade talks gave way to losses triggered by falling bank stocks and the threat of a federal government shutdown.
The Standard & Poor’s 500 index slipped 0.94 of a point, or less than 0.1%, to 2,636.78. The Dow Jones industrial average fell 53.02, or 0.2%, to 24,370.24, and the Nasdaq composite rose 11.31, or 0.2%, to 7,031.83. Slightly more stocks fell on the New York Stock Exchange than rose.
It's the latest in a string of sharp turns in direction for the market, which has lurched up and mostly down since late September as investors recalibrate how worried they are about the global trade war, rising interest rates and expectations for a slowing economy.
The whipsaw action is a nerve-racking departure from much of the last decade, when investors enjoyed a largely calm, rising market. Analysts are debating how big a turning point it is for the longest bull market on record.
“It's the last gasps of a bull market,” said Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments. Weiss has become more cautious about stocks as he's watched highflying technology companies take a back seat to makers of household products and other stocks that tend to do better in the late stages of a bull market.
Jon Adams, senior investment strategist at BMO Global Asset Management, is more optimistic that stocks can keep rising. But he says investors should get used to this increase in volatility, which follows a calmer-than-usual run.
“We came from a very low-volatility, benign environment in 2017, and I think we're getting to a more normal level of volatility, although a bit higher than historically,” he said.
Behind that volatility are many forces pushing and pulling the market in various directions, and how optimistic or pessimistic investors are feeling about them on a given day. Several were on display Tuesday.
Early in the morning, the S&P 500 jumped as much as 1.4% after China's Commerce Ministry said U.S. Treasury Secretary Steven T. Mnuchin and Chinese Vice Premier Liu He spoke by phone about “the promotion of the next economic and trade consultations.”
Media reports also said China agreed to reduce tariffs on U.S. autos. That raised hopes that the two countries can make progress on their trade dispute. Investors worry that weaker global trade would dent global economic growth and corporate profits.
Indexes veered to losses later in the session, hurt by falling bank stocks. Financial stocks in the S&P 500 fell at least 1% for the fifth straight day, and the S&P 500 was down as much as 0.6% at one point.
Also weighing on the market was President Trump's threat to shut down the government if Congress doesn't provide money to build a wall at the U.S.-Mexico border.
Online clothing retailer Stitch Fix crashed 20.9% to $20.54 after it issued a disappointing outlook.
Benchmark U.S. crude oil rose 65 cents to settle at $51.65 a barrel. Brent crude, the international standard, rose 0.4% to $60.20.
Natural gas fell 14 cents to $4.41 per 1,000 cubic feet. Heating oil was close to flat at $1.85 a gallon. Wholesale gasoline rose 2 cents to $1.44 a gallon.
Gold slipped $2.20 to $1,247.20 an ounce. Silver rose 2 cents to $14.63 an ounce. Copper rose 5 cents to $2.77 a pound.
The yield on the 10-year Treasury rose to 2.87% from 2.85%. The two-year yield rose to 2.75% from 2.73%. The gap between those two yields has been shrinking this year, which has worried some investors. When the 10-year yield falls below the two-year yield, investors call it an “inverted yield curve” and see it as a precursor to a recession.
The dollar rose to 113.40 yen from 113.21 yen. The euro fell to $1.1325 from $1.1353, and the British pound fell to $1.2527 from $1.2557.