(Reuters) – U.S. stocks paused on Monday after three sessions of gains as a lack of clarity over the first phase of a U.S.-China trade deal weighed on sentiment, while investors geared up for the third-quarter earnings season.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., October 9, 2019. REUTERS/Brendan McDermid
The S&P 500 and Dow Jones indexes had ended Friday with their first weekly gain in a month after Washington signaled the two sides had taken a major step in easing the tit-for-tat measures that have hammered global growth this year.
President Donald Trump, however, acknowledged that the agreement could still collapse, while Treasury Secretary Steven Mnuchin said on Monday he had “every expectation” that if a U.S.-China trade deal was not in place by Dec. 15, additional tariffs would be imposed.
“Investors are trying to wrap their head around this ‘non deal’,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York.
“If (the market) was really skeptical, it would be selling off a lot harder. But it’s not because there are some good points to it – that they are still talking and potentially reaching a deal.”
Financial markets had a rocky start to the month on signs of escalating trade tensions, slowing global economic growth and rising geopolitical risks. The S&P 500 and Dow Jones indexes are off about 0.3% so far this month, reversing a gain of about 2% for September.
Sectors considered stable during times of economic uncertainties such as utilities .SPLRCU and consumer staples .SPLRCS were the top decliners among the S&P sectors.
Investors will now keep a close watch on the earnings season to gauge the impact of the trade conflict and a sluggish domestic economy on corporate America.
The reporting season kicks off on Tuesday, with the big U.S. banks expected to report a 1.2% decline in earnings due to falling interest rates, a raft of unsuccessful stock market floatation and trade tensions.
Overall, analysts are forecasting a 3.2% decline in profit for S&P 500 companies for the quarter from a year earlier, based on IBES data from Refinitiv.
Among individual stocks, Beyond Meat Inc (BYND.O) fell 4.4% after Wells Fargo initiated coverage of the plant-based meat maker with “market perform”.
Nike rose 1% after Bank of America Merrill Lynch upgraded the stock to “neutral” from “underperform”.
Shares of U.S. construction and engineering company AECOM (ACM.N) rose 4.5% after it agreed to sell its management services unit to private equity firms for about $2.4 billion.
Declining issues outnumbered advancers for a 1.36-to-1 ratio on the NYSE and a 1.54-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and three new lows, while the Nasdaq recorded 14 new highs and 90 new lows.
Additional reporting by Medha Singh and Susan Mathew in Bengaluru; Editing by Sriraj Kalluvila