FILE - In this Oct. 7, 2019, file photo specialists Mario Picone, left, and Anthony Rinaldi work on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EDT on Monday, Oct. 14. (AP Photo/Richard Drew, File)

Stock indexes wobble as traders turn cautious over trade

October 14, 2019 - 3:28 pm

Major U.S. stock indexes edged lower in afternoon trading Monday, a shaky start to the week for the market after the S&P 500 notched its first weekly gain in four weeks.

Losses in consumer goods makers, utilities and industrial stocks outweighed gains in banks and elsewhere in the market. Energy stocks also fell as crude oil prices headed lower.

Trading was choppy for much of the day after falling in the early going. The muted trading follows a rally Friday spurred by investor optimism amid signs of progress in the latest round of trade negotiations between the U.S. and China.

Washington and Beijing agreed to a truce following talks last week. The U.S. held off on tariffs set to kick in this week and China agreed to buy more farm goods. But the U.S. has yet to cancel plans for more tariffs in December and the nations still have several complicated issues to negotiate, which may have dimmed some of the optimism that fueled last week's market rally.

Procter & Gamble contributed to the slide in consumer goods makers, dropping 0.8%. Colgate-Palmolive fell 1.5%.

Deere & Co. helped pull industrial sector stocks lower, falling 1.3%. Communication services companies also fell. Comcast dropped 0.7% and Twitter was down 1.3%.

Some energy companies declined as crude oil prices dropped 2%. Devon Energy slid 1.9%.

Financial stocks rose, with insurers among the gainers. Progressive added 0.6%

Several pharmaceutical companies helped drive health care stocks higher. Amgen rose 1.3% and Alexion Pharmaceuticals climbed 2.3%.

Bond markets and the U.S. government were closed for the Columbus Day holiday.

Investors are also looking ahead to the start of the third-quarter earnings season, as companies begin to report their latest quarterly results. Major investment banks and other big companies are scheduled to serve up their report cards for the July-September quarter this week, including JPMorgan Chase, Johnson & Johnson, United Airlines, Netflix, Coca-Cola and UnitedHealth Group.

Expectations for S&P 500 companies' third-quarter results are generally low, with analysts forecasting a drop of 4.2% from a year ago. The results, plus what CEOs say about their spending and revenue forecasts, should give a better picture of the economy's potential direction.

"The market is a little bit nervous about earnings because there are some estimates out there that say there's going to be negative growth," said Karyn Cavanaugh, senior markets strategist at Voya Investment Management.

KEEPING SCORE: The S&P 500 index was down 0.1% as of 3:18 p.m. Eastern time. The Dow Jones Industrial Average slipped 24 points, or 0.1%, to 26,791. The Nasdaq rose less 0.1%. Small-company stocks did worse than the rest of the market. The Russell 2000 index lost 0.4%.

TRADE UNCERTAINTY: Investors applauded the progress made by the U.S. and China last week, but uncertainty remains over whether they can ink a broader deal. The U.S. agreed to suspend a planned hike in tariffs on $250 billion of Chinese goods that had been set to kick in Tuesday. Beijing, meanwhile, agreed to buy $40 billion to $50 billion in U.S. farm products.

The truce was a result of the 13th round of negotiations between the nations since the trade war began well over a year ago. The key sticking points of intellectual property and trade secrets still hang over the dispute.

The overall picture hasn't changed for companies, which are still holding off on forecasts and investments because of the uncertain trade situation.

"There is not yet a viable path to existing tariffs declining and tariff escalation remains a meaningful risk," Michael D. Zezas, a Morgan Stanley strategist, wrote in a note to clients. "Thus, we do not expect a meaningful rebound in corporate behavior that would drive global growth expectations higher."

Trump and Chinese President Xi Jinping are due to attend an economic conference in Chile in mid-November. That is raising hopes a face-to-face meeting might produce progress.

BANKS ON DECK: Several major banks will report their latest quarterly financial results this week and give investors an opening glimpse into the latest round of corporate earnings. JPMorgan Chase, Citigroup and Wells Fargo will all report results on Tuesday. Bank of America and PNC Financial will report results on Wednesday.

Investors will be watching for information on income from loans as banks contend with sinking bond yields. Falling yields force banks to set lower rates on mortgages and other kinds of loans.

TAKING OVER: Shares in Parsley Energy slid 11.1% on news the oil and gas company is buying Jagged Peak Energy in an all-stock deal. Jagged Peak shares dropped 1.3%.

DEAL IN THE WORKS: Aecom climbed 6.1% after the provider of technical and management-support services said it is selling its management services business.

OVERSEAS: European markets closed lower. The European Union faces a potential trade war with the U.S. as the Trump administration readies trade sanctions on up to $7.5 billion worth of goods. The tariffs are set to go into effect Friday and stem from a dispute over subsidies to the airplane maker Airbus.

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AP Business Writer Damian J. Troise contributed.

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