By Sue Chang and Chris Matthews, MarketWatch
Oil, gold under pressure, dollar edges higher as pound slips
The major U.S. benchmarks struggled for direction Monday as a
round of U.S.-China tariff negotiations in Beijing commenced and as
the threat of another partial government shutdown loomed.
How are major indexes faring?
The Dow Jones Industrial Average fell 21 points to 25,083, a
decline of less than 0.1%, while the S&P 500 index climbed 3
points, or 0.1%, 2,711. The Nasdaq Composite Index rose 21 points,
or 0.3%, to 7,319.
Need to Know: Weak hands may be signaling a 'major market
decline,' fund manager warns
(http://www.marketwatch.com/story/weak-hands-may-be-signalling-a-major-market-decline-fund-manager-warns-2019-02-11)
What's driving the market?
The latest round of trade negotiations between the U.S. and
China will begin Monday with working level talks while Treasury
Secretary Steven Mnuchin and U.S. Trade Representative Robert
Lighthizer are due to arrive Thursday for more high-level
discussions.
Even if tariffs on Chinese goods remain at 10% beyond next
month's deadline, as some media reports have suggested, the
lingering uncertainty around a trade resolution would only
highlight that a 12-month long negotiation between the world's
largest economies has failed to yield any tangible results.
That could further unsettle investors and U.S. corporations
alike who are looking at a 12:01 a.m. Eastern Time March 2 deadline
for an agreement to be struck between the two countries. The U.K.,
meanwhile, is bracing for a March 29 scheduled exit from the
European Union with or without a trade agreement in hand.
See:Why stock-market traders are already bracing for a
make-or-break month in March
(http://www.marketwatch.com/story/why-stock-market-traders-are-already-bracing-for-a-make-or-break-month-in-march-2019-02-09)
As well, investors are preparing for another potential
government shutdown after talks broke down between the main parties
(http://www.marketwatch.com/story/border-security-negotiations-stall-as-another-shutdown-deadline-looms-2019-02-10)
over whether to limit the number of migrants authorities can
detain. The White House hasn't ruled out another shutdown if a
border security compromise can't be reached by midnight Friday.
There are no economic data releases scheduled for Monday.
What are analysts saying?
Mat Klody, chief investment officer at Kleebeck Wealth
Management, told MarketWatch that the major benchmarks' steady
march higher since the beginning of the year is being driven "by
the perception that the Fed has done a complete 180" in its
apparent dovish turn, after raising rates four times last year.
But investors must now confront the fact that the Fed will
likely only be able to refrain from further rate increases if
global weakness abroad does, in fact, slow the U.S. economy, he
said. "If in a few months we see China and Europe slowing further,
that investing environment could be a lot choppier," he said.
"A lot of the good news out there is already priced into stocks
at these levels," wrote Tom Essaye, president of the Sevens Report,
in a Monday note to clients. "At 2,700 or higher, the S&P 500
isn't priced for perfection, but it is priced for positive
resolution of numerous events," including the U.S.-China trade
spat, a stabilization of global economic growth, and the Fed
declining to raise rates at all in 2019, he said.
"It's not that good things aren't possible, it's that a lot of
them are now assumed by the S&P 500 at 2,700 or higher, and
that creates not much reward and more risk," Essaye wrote.
Which stocks are in focus?
Restaurant Brands International Inc. (QSR) shares rose 1.3%
after the parent company of Burger King reported profit and
same-store sales growth above Wall Street expectations.
Morgan Stanley (MS) shares fell 1% after the bank announced the
acquisition
(http://www.marketwatch.com/story/morgan-stanley-to-buy-canadas-solium-capital-for-900-million-in-cash-2019-02-11)
of Canada-based Solium Capital Inc. in a deal valued at $900
million.
Shares of Electronic Arts Inc. (EA) rallied 6%, building on
Friday's momentum when it rose 16%, on news that the company's Apex
Legends game logged more than 10 million players in its first 72
hours
(http://www.marketwatch.com/story/ea-stock-jumps-after-company-says-apex-legends-hit-10-million-players-in-first-three-days-2019-02-08).
Shares of Tesla Inc.(TSLA) gained 3.4% after a Canaccord analyst
upgraded the stock to buy
(http://www.marketwatch.com/story/tesla-stock-jumps-4-as-canaccord-upgrades-and-predicts-a-more-stable-year-in-2019-2019-02-11)
from hold and said the electric-vehicle story is
underappreciated.
How are other markets trading?
In Asia
(http://www.marketwatch.com/story/asian-markets-drop-on-renewed-worries-over-us-china-trade-talks-2019-02-07),
the Shanghai Composite returned from a week of holiday to close up
nearly 1.4%. Stocks in Europe were stronger across the board with
the Stoxx Europe 600 up 0.9%.
Crude oil was under pressure
(http://www.marketwatch.com/story/oil-prices-slip-as-us-rig-count-rises-again-2019-02-11),
while gold also fell
(http://www.marketwatch.com/story/gold-eases-as-dollar-climbs-with-revived-trade-talks-holding-market-attention-2019-02-11)
as the U.S. dollar rose against its peers
(http://www.marketwatch.com/story/dollar-extends-climb-to-kick-off-week-with-partial-government-shutdown-looming-2019-02-11).
--Barbara Kollmeyer contributed to this report
(END) Dow Jones Newswires
February 11, 2019 13:08 ET (18:08 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.