Stocks End Barely Lower With Late Session Rally: Markets Wrap

(Bloomberg) -- Stocks finished down slightly Friday as a drop in energy shares and mounting concerns about the ongoing government shutdown balanced out strength among carmakers following an optimistic earnings forecast from General Motors Co. Treasuries rose and the dollar was flat, putting it on track for a fourth straight week of declines.

All major equity benchmarks were lower -- barely. The S&P 500 Index saw a late day surge that left it down less than 0.05 percent, its first day in the red in more than a week, as utilities and energy companies retreated with oil tumbling below $52 a barrel. Meanwhile, auto companies gained around 3 percent on GM’s encouraging outlook. The gauge still posted its third straight weekly advance, climbing 2.5 percent. The post-Christmas rally had reached 10 percent before stalling at 2,600, a level it hasn’t topped since mid-December.

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“Perhaps we’re seeing a bit of a pause here as bulls and bears fight it out at this key technical level,” said Matthew Miskin, a market strategist at John Hancock Investments in Boston.

The dollar rose early in the session before giving back the gains as investors appeared to be trimming positions heading into the weekend. It’s been pressured, and bonds have been boosted, by the Federal Reserve’s message of patience on further interest-rate hikes. That case was bolstered by U.S. price data showing inflation slowing in line with expectations.

“The saving grace of all of this is that the U.S. economy has actually withstood the test of 12 months of challenges without buckling over,” said Kevin Caron, a senior portfolio manager at Washington Crossing Advisors.

The Stoxx Europe 600 Index retreated from an earlier gain to trade lower. In Asia, shares rose in Shanghai, Tokyo, Seoul and Hong Kong amid hopes for a breakthrough on the trade dispute between China and U.S. European debt tracked Treasuries higher. The pound advanced even as Prime Minister Theresa May’s office countered reports that Brexit may be delayed.

Stocks are still on track for big gains this week on signs of progress between the world’s two biggest economies on trade and the Fed’s dovish commentary. Nevertheless, worries remain about economic growth and earnings prospects, while there’s also uncertainty as the U.S. partial government shutdown threatens to extend into a fourth week.

Chinese Vice Premier Liu He is set to visit Washington on Jan. 30 and 31 for further trade talks. China’s yuan, which slumped last year as trade tensions worsened, is heading for its best week since 2005 -- back when the country dropped a fixed peg to the dollar.

These are the main moves in markets:

Stocks

• The S&P 500 Index was down less than 0.05 percent after falling as much as 0.7 percent earlier in the session.
• The Stoxx Europe 600 Index declined 0.1 percent.
• The MSCI All-Country World Index climbed 0.3 percent to the highest in a month.
• The MSCI Emerging Market Index advanced 0.2 percent to the highest in more than five weeks.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro fell 0.3 percent to $1.1466.
• The Japanese yen dipped 0.1 percent to 108.53 per dollar.
• The British pound jumped 0.8 percent to $1.2848, the strongest since November.

Bonds

• The yield on 10-year Treasuries tumbled five basis points to 2.6954 percent, the biggest fall in more than a week.
• Germany’s 10-year yield decreased two basis points to 0.239 percent.
• Britain’s 10-year yield increased two basis point to 1.29 percent.

Commodities

• The Bloomberg Commodity Index added 0.2 percent.
• West Texas Intermediate crude fell 1.7 percent to $51.69 a barrel, the first retreat in more than two weeks.
• Gold gained 0.1 percent to $1,288.42 an ounce.

--With assistance from Adam Haigh, Tian Chen and Eddie van der Walt.

To contact the reporters on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net;Reade Pickert in New York at epickert@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Eric J. Weiner

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