Stocks Waver on US-China Trade Worries Once Again

Stocks recovered most of an early loss and drifted to a mixed finish on Wall Street as gains for banks and industrial companies were offset by losses elsewhere in the market and more in Wednesday’s Stock Market Update.

Capital One Financial rose 1.7 percent Wednesday, and Boeing climbed 2 percent. UnitedHealth Group fell 4.9 percent.

The market slumped in the early going after a key U.S. trade representative heightened doubt over how much progress was being made in trade talks between the U.S. and China.

Trade Representative Robert Lighthizer told a panel of lawmakers that “much still needs to be done” before the U.S. and China can reach an agreement. China has offered to make major purchases of U.S. goods, such as soybeans and natural gas, in a bid to resolve the conflict, but Lighthizer said such steps wouldn’t be enough.

“The issues on the table are too serious to be resolved with promises of additional purchases,” he said. “We need new rules.”

Investors were also keeping an eye on escalating international tensions. Pakistan said it shot down two Indian warplanes in the disputed region of Kashmir and captured a pilot. The incident worsened relations between the nuclear-armed rivals to a point not seen in the last 20 years.

The news overshadowed a mix of corporate earnings reports. Weight Watchers plunged to its lowest point in nearly two years after issuing a dismal forecast. Best Buy surged on surprisingly good holiday sales.

KEEPING SCORE: The S&P 500 fell 1 point, less than 0.1 percent, to 2,792. The Dow Jones Industrial Average lost 72 points, or 0.3 percent, to 25,985. The Nasdaq edged up 5 points, or 0.1 percent, to 7,554. Bond prices fell. The yield on the 10-year Treasury rose to 2.69 percent.

Major indexes in Europe declined.

TRADE DISPUTE: Negotiations between Washington and Beijing continue under the threat of additional tariffs on Chinese goods that could escalate the conflict and make products even more costly for consumers and companies.

President Donald Trump has postponed increasing tariffs on $200 billion in Chinese goods that would have been effective March 2. He has not given a new date for the higher tariffs if negotiations falter.

The main sticking point for the U.S. centers on ending cyber theft of commercial secrets, limits on state support for Chinese companies, and an end to the forced transfer of technology.

ANALYST’S TAKE: Lighthizer’s comments are “creating market nervousness”, said Kristina Hooper, chief global market strategist at Invesco. Meanwhile, comments from Federal Reserve Chairman Jerome Powell are shedding more light on the Fed’s shift to a more cautious approach.

“He’s certainly reminding the market about the very significant about-face the Fed has made and that continues to raise questions about what the Fed has been seeing and what is it worried about,” she said.

SLIMMING DOWN: Weight Watchers shed 33.5 percent after the weight-loss program operator gave investors a surprisingly weak forecast. The company did not sign up as many subscribers as it hoped this winter and expects its profits to suffer.

Weight Watchers says it now expects to earn between $1.25 and $1.50 a share this year. Analysts polled by FactSet had been expecting $3.38 a share.

CEO Mindy Grossman says the company hopes to pull in more subscribers this spring, with high-profile investor Oprah Winfrey playing a central role in its upcoming TV and digital marketing campaign.

NOT SO HUNGRY: Dean Foods slid 13.6 percent after the food and beverage company reported a wider-than-expected loss in the fourth-quarter and suspended its dividend.

HOLIDAY HIGHS: Best Buy surged 15.6 percent after reporting that its holiday sales bucked a downward trend for retailers.

The electronics retailer’s profit beat forecasts, but more importantly a key retail sales measure continued growing during a tough quarter for the industry. The company also raised its quarterly dividend by 11 percent and its board of directors approved a $3 billion stock buyback program.

BUYBACK BOOST: Palo Alto Networks climbed 8.2 percent after the cybersecurity company’s fiscal profit surged past analysts’ forecasts. The company also announced a $1 billion stock buyback program.