Falling bank stocks pulled U.S. indexes a touch lower, and the S&P 500 had just its third loss in the last three weeks and more in Monday’s Stock Market Update.

Goldman Sachs dropped to one of the largest losses in the S&P 500 after saying it’s off to a “muted start to the year,” though its earnings for the first quarter still beat analysts’ expectations. Citigroup also fell following its report, as banks lead off this quarter’s earnings season.

Expectations are low for the market in general, and analysts are expecting S&P 500 companies in upcoming weeks to report the first drop in earnings in nearly three years.

Still, stocks have enjoyed a hot start to the year after the Federal Reserve said it may not raise interest rates at all in 2019, and the S&P 500 remains just 0.9% below its record set in September. Other indexes are also close to their highs.

“I think we’re going to see equities continue to confound their critics and advance,” said Margie Patel, senior portfolio manager at Wells Fargo Asset Management. She expects growth for both the economy and corporate earnings to reaccelerate later this year, in large part because of the Federal Reserve’s pledge to hit pause on interest rate hikes. The move follows seven increases in the last two years, including a final hike in December, that helped send the S&P 500 to a nearly 20% loss at one point.

“If you look through history, recessions have been precipitated by the Federal Reserve tightening and causing recessions — telling banks, ‘Don’t make loans’ and pulling out liquidity,” she said. “This time, they got right up to the brink, and when the market had that violent reaction in December, that made them rethink their approach.”

Optimism has also grown that the U.S. and China can resolve their trade dispute. U.S. Treasury Secretary Steven Mnuchin said Saturday that the world’s two largest economies were moving closer to an agreement.

Treasury yields, which tend to move in sync with expectations for the economy, have generally risen in recent weeks.


KEEPING SCORE: The S&P 500 fell 1 point to 2,905 time by closing time. It flipped from a small gain of 0.1% at the open to modest losses of as much as 0.4% through the morning.

The Dow Jones industrial average fell 27 points, or 0.1%, to 26,384, and the Nasdaq composite lost 0.1%.

BANKING ON MORE: Goldman Sachs reported stronger profit for the first quarter than Wall Street expected, but lighter trading activity during the first three months of the year meant that its revenue fell short of analysts’ estimates. Its shares fell 2.9%.

Citigroup also reported stronger profit for the first three months than analysts expected, but its stock was flat.

SHORT SHRIFT: Alliance Data Systems sank to the largest loss in the S&P 500 after it agreed to sell its Epsilon business to Publicis Groupe for $4.4 billion in cash. That price tag was $1 billion less than what analysts at BMO Capital Markets valued the Epsilon business at.

Alliance Data Systems lost 8.3%.

HAULING: Waste Management jumped to one the biggest gains in the S&P 500 after it said it would buy its smaller rival, Advanced Disposal, for $3 billion. It will also assume $1.9 billion of debt in the deal.

Waste Management rose 2.8%, and Advanced Disposal surged 18.9%.

TRADE WATCH: Speaking on the sidelines of the International Monetary Fund and World Bank spring meetings, Mnuchin said the U.S. and China held phone discussions last week. He wasn’t sure if more face to face meetings would be needed. Mnuchin didn’t give a timeframe for when negotiations might be wrapped up.

Mnuchin added that the proposed agreement has seven chapters and will allow both countries to set up enforcement offices to make sure the deal is followed.

Chinese foreign ministry spokesman Lu Kang said Thursday that the discussions were “moving forward” and “new substantial progress” was made.

MARKETS ABROAD: Asian markets were mixed, with the Nikkei 225 in Tokyo jumping 1.4%, South Korea’s Kospi gaining 0.4% and the Hang Seng in Hong Kong losing 0.3%.

European markets were listless. The FTSE 100 in London was virtually flat, and the French CAC 40 rose 0.1%, while Germany’s DAX was up 0.2%.

STRONG BONDS: The yield on the 10 year Treasury note held steady at 2.55%. It has been climbing since late last month, when it fell to 2.37% amid a crescendo of worries that global economic growth was slowing.

SLICKED: Oil prices gave up some of this year’s big gains. Benchmark U.S. crude slipped 48 cents to $63.41 per barrel. Brent crude, the international standard, fell 44 cents to $71.11.

They’ve both shot up more than 30% this year.

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