U.S. Stocks Waver as Concerns About Trade Talks Mount

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10/10/2019 | 01:51 pm

By Avantika Chilkoti

U.S. stocks were little changed Thursday, wobbling as speculation about the outcome of trade talks between the world's two largest economies continued to swing global markets.

The Dow Jones Industrial Average fell 7 points, or less than 0.1%, to 26341 shortly after the opening bell. The S&P 500 was flat and the Nasdaq Composite added less than 0.1%..

The S&P entered the session down nearly 2% so far in October and roughly 3.5% below July's record, though it was still up 16% for the year.

Thursday's moves were the latest example of trade-induced volatility in markets. Global indexes and stock futures swung between gains and losses overnight on conflicting reports. Fears that the U.S. and China won't reach a ceasefire on tariffs have led to projections that a global economic slowdown will ripple to consumers, denting spending and crimping corporate profits.

Negotiations are set to continue Thursday after the White House signed off on special licenses for some U.S. companies to do business with Chinese telecom giant Huawei Technologies, a possible sign of goodwill. At the same time, media reports that Chinese officials will leave Washington a day earlier than expected fueled some speculation that the talks might not relieve pressure on the world economy.

And the U.S. adding 28 Chinese entities to an export blacklist earlier in the week also prompted caution among investors.

"Throughout the course of the week we have had conflicting signals from both sides of the negotiating table," said Matthew Cairns, a senior rates strategist at Rabobank. "That is a lot of to-ing and fro-ing from both sides of the negotiating table, which clearly provides little material traction for markets to grab on to."

If the two sides can't reach a trade deal and U.S. tariffs on some Chinese products rise as scheduled next week, some analysts expect an even sharper slowdown in economic activity. New consumer imports are also set to be added to the list of duties in mid-December.

Those worries add pressure on the Federal Reserve and other central banks that are cutting interest rates to help global growth stabilize. Figures Thursday showed that U.S. consumer prices were flat last month, the latest sign of muted inflation that could give the Fed more room to cut rates for the third time this year.

Earlier in the week, figures showed that prices businesses receive fell unexpectedly in September from the previous month.

Treasury yields rose following the data Thursday, with the yield on the benchmark 10-year U.S. Treasury note rising to 1.610%, according to Tradeweb, from 1.585% a day earlier. Yields, which move inversely to prices, have fallen in recent months as investors have sought safety in bonds.

Among individual stocks, shares of Delta Air Lines slid 3.7% premarket after the company's quarterly results added to concerns about rising carrier costs. Third-quarter reporting season for large companies begins in earnest next week, with S&P 500 firms expected to post a drop in profits from a year earlier.

Elsewhere, the Stoxx Europe 600 edged down 0.2%, giving up advances made earlier in the day. In Asia, the Shanghai Composite Index gained 0.8%, while Japan's Nikkei 225 rose 0.4%.

-- Amrith Ramkumar contributed to this article.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com

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