U.S. Stocks Drift on Trade Jitters; Dollar Climbs: Markets Wrap

(Bloomberg) -- U.S. equities languished Thursday, with small caps leading declines, as trade tensions continued to weigh on financial markets. The dollar jumped after the European Central Bank sounded a cautious note on growth.

The S&P 500 Index finished the session little changed, with about three decliners in the benchmark for every two that rose. Utilities advanced, while banks came under pressure. The Dow Jones Industrial Average eked out a gain, led by Procter & Gamble and McDonald’s. The greenback edged higher as U.S. jobless claims came in below estimates. Treasuries were little changed.

Investors are studying the latest moves in the global trade tug of war, after Chinese importers resumed buying U.S. soybeans and Beijing reiterated that its officials were in close contact with Washington counterparts on negotiating details of a broader deal.

But worries remain: China detained a second citizen of Canada for questioning, further heightening tensions between the two countries, and Trump administration officials on Wednesday signaled that Beijing will have to do more to end the tariff war. U.S. Commerce Secretary Wilbur Ross said on Thursday that there have been “frequent conversations” with China, which gave a good road map to resolving many issues.

“On the fixed-income side, investors are focused on economic growth and what the Fed is thinking about for next year,” said Jim Barnes, director of fixed income at Bryn Mawr Trust. “On the equity side, it continues to trade on headline news related to trade. That’s been happening for a while and it continues to happen.”

The ECB kept interest rates unchanged, confirmed an end to its asset-purchase program and provided more details on its reinvestment plan. Speaking after the decision, President Mario Draghi said the balance of risks to the euro area had moved to the downside.

The pound gained after European Union leaders were said to be set to discuss issuing a declaration on the Irish backstop that would help Prime Minister Theresa May get a Brexit deal through Parliament. The Stoxx Europe 600 Index finished lower, while Hong Kong and Chinese shares outperformed as equities across Asia extended their rebound.

West Texas crude climbed above $53 a barrel after Saudi Arabia was said to be planning to slash exports to the U.S. in the coming weeks. Gold declined.

Terminal subscribers can read our Markets Live blog.

Still to come this week:

• China industrial production, retail sales data for November is due Friday.

And these are the main moves in markets:

Stocks

• The S&P 500 Index fell less than 0.05 percent as of 4:02 p.m. New York time.
• The Stoxx Europe 600 Index fell 0.2 percent.
• The U.K.’s FTSE 100 Index declined less than 0.05 percent.
• Germany’s DAX Index fell less than 0.05 percent.

Currencies

• The Bloomberg Dollar Spot Index rose 0.2 percent.
• The euro declined 0.1 percent to $1.1361.
• The British pound climbed 0.3 percent to $1.2664.
• The Japanese yen dipped 0.3 percent to 113.60 per dollar.

Bonds

• The yield on 10-year Treasuries gained less than one basis point to 2.91 percent.
• Germany’s 10-year yield rose one basis point to 0.29 percent.
• Britain’s 10-year yield climbed one basis point to 1.289 percent.

Commodities

• West Texas Intermediate crude rose 3.7 percent to $53.04 a barrel, its biggest gain in more than a week.
• Gold fell 0.2 percent to $1,242.78 an ounce.

--With assistance from Luke Kawa, Sydney Maki, Austin Weinstein, Sarah Ponczek, Adam Haigh and Todd White.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn, Yakob Peterseil

©2018 Bloomberg L.P.