Stocks claw back from early slide, extending win streak to five days

U.S. stocks had a day of uneven trading Thursday but ended higher, notching their fifth straight win. Industrial companies such as Boeing and General Electric rose while retailers fell as Macy’s suffered its biggest loss of all time.

Stocks struggled in the early going after U.S. and Chinese officials finished trade talks in Beijing. Transportation and machinery companies climbed after the U.S. trade representative said China agreed to buy more agricultural and manufactured products.

Macy’s said its sales over the holidays were worse than expected and slashed its annual profit and sales forecasts. Kohl’s and L Brands, the parent of Victoria’s Secret, also posted disappointing results. A wide variety of retailers plunged as investors worried that the stock market’s December dive stopped some shoppers from spending as much as they had planned.

Macy’s flop reinforces investors’ worst fears about retail »

“High-end consumers, even though they’re making decent money [and] the economy is going on relatively strong, it may have affected their willingness to splurge over the holidays,” said Ken Perkins, president of the research firm Retail Metrics. “It was not good timing at all.”

The Standard & Poor’s 500 index rose 11.68 points, or 0.5%, to 2,596.64. The Dow Jones industrial average rose 122.80 points, or 0.5%, to 24,001.92.

The Nasdaq composite ticked up 28.99 points, or 0.4%, to 6,986.07. The Russell 2000 index of smaller-company stocks rose 6.63 points, or 0.5%, to 1,445.43.

U.S. negotiators said China’s delegation pledged to buy more energy and agricultural products and manufactured goods. That helped Boeing climb 2.6% to $352.61, General Electric jump 5.2% to $8.94 and Deere rise 3.1% to $159.12.

However, that point is considered a relatively minor area of disagreement, and there were no hints of progress on bigger issues. The U.S. wants China to change its technology policy to reduce cybertheft of trade secrets and seeks more access to the Chinese market and increased protection for foreign patents and copyrights.

Macy’s said holiday sales slowed in mid-December, and it cut its annual profit and sales forecasts. Its stock plunged 17.7% to $26.11 in heavy trading. Macy’s went public in February 1992 and reached an all-time high of almost $73 a share in mid-2015, but four of the five biggest single-day dives in its history have come in the last three years.

Macy’s announcement came as a surprise because investor expectations for the holiday season have been high. Unemployment is the lowest it has been in decades, wages are rising and consumer confidence is high, while gas prices dropped late last year. In late December, stocks rallied after Mastercard SpendingPulse said shoppers spent $850 billion from Nov. 1 to Dec. 24, an increase of 5% from the same time a year earlier.

But the stock market had fallen sharply in October and then took a dramatic drop over the first three weeks of December. Shortly afterward the federal government went into a partial shutdown that is still ongoing.

Although large retailers took steep losses Thursday, Perkins said the market turmoil is a much bigger problem for companies like Macy’s because most stocks are owned by relatively wealthy people. That means big-box stores and companies that sell less expensive goods won’t be affected as much, as shown by Target’s stronger sales report.

Kohl’s shares declined 4.8%. L Brands slid 4.4%. Target fell 2.8%.

American Airlines slid 4.1% to $32.04 after saying its fourth-quarter revenue will be at the low end of its estimates. Rival airlines slipped.

Chipmakers rose and other technology stocks edged up. High-dividend stocks such as utilities and household goods companies made strong gains.

Oil prices extended their rally to a ninth consecutive day. U.S. crude rose 0.4% to $52.59 a barrel. It’s now up 23.7% since hitting an 18-month low Dec. 24. Brent crude, the international standard, fell 0.4% to $61.68 a barrel.

Stocks briefly fell Thursday after Federal Reserve Chairman Jerome H. Powell said he expects the Fed’s $4-trillion bond portfolio to shrink until it is “substantially smaller than it is now.” Powell noted that the Fed had about $1 trillion on its balance sheet before the 2007-08 financial crisis.

Fed Chair Jerome Powell warns an extended shutdown could damage the economy »

The Fed’s bond holdings are slowly shrinking, which tends to put upward pressure on long-term interest rates. Investors have grown concerned about the effects of those tighter credit conditions as the global economy slows. Powell said in December that the Fed could slow the changes to its portfolio if necessary.

Bond prices slipped. The yield on the 10-year Treasury note rose to 2.74% from 2.72%.

Wholesale gasoline rose 0.4% to $1.43 a gallon. Heating oil climbed 1.3% to $1.91 a gallon. Natural gas fell 0.5% to $2.70 per 1,000 cubic feet.

Gold fell 0.4% to $1,287.40 an ounce. Silver fell 0.6% to $15.64 an ounce. Copper fell 0.7% to $2.97 a pound.

The dollar rose to 108.42 yen from 108.28 yen. The euro fell to $1.1500 from $1.1544.