U.S. stocks erased an early morning loss on Friday to pull higher, the latest spin cycle for a market that’s been tossed around the last two weeks by rising and falling worries about the global trade war.
The S&P 500 fell as soon as trading opened, following European and Asian markets lower. Industrial companies had the sharpest drops after equipment maker Deere cut its profit forecast for the year, citing slower sales from farmers worried about exports, among other factors.
But stocks cut their losses, and demand for safe Treasury bonds dissipated as the morning progressed. A midmorning report showed that U.S. shoppers remain more confident than economists expected. Media reports also suggested a deal to remove steel and aluminum tariffs on Canada and Mexico may be imminent.
Such jostling within the course of a single day has become common in recent weeks as the market pivoted on each turn in the U.S. trade dispute with China. President Donald Trump made good on a threat to raise tariffs on Chinese-made products, and China retaliated with tariffs of its own. The threats were interspersed with some signs of reconciliation.
Over the last week, the S&P 500 followed up its second worst day of the year with three straight gains. If Friday’s morning gain holds, the S&P 500 will avoid its first back to back weekly loss of the year.
The escalating tensions between the world’s largest economies have upended the calm that dominated markets for the early part of this year, when expectations rose that a trade agreement was in the works. The S&P 500 has twice dropped by at least 1.5% in the last two weeks, the same number it had in the first four months of the year.
KEEPING SCORE: The S&P 500 was up 0.3%, as of 11:15 a.m. Eastern time, after being down as much as 0.8% earlier in the morning. After all its tumbling around the last two weeks, the index remains 2.1% below the record it set last month.
The Dow Jones Industrial Average rose 76 points, or 0.3%, to 25,938 after being down 204 points earlier in the morning. The Nasdaq composite rose 0.2%.
TRADE FRONTS: It’s not just the world’s second largest economy, China, that the United States has been jousting with on trade.
President Trump on Friday delayed any decision to impose tariffs on imports of cars and auto parts as negotiations continue with Europe and Japan.
But the market’s focus has rested mainly on China. The Trump administration has issued an executive order aimed at banning Huawei equipment from U.S. networks. Another sanction that subjects the Chinese telecommunications giant to strict export controls took effect on Thursday. China has threatened to retaliate. It remains to be seen how the move will affect trade negotiations, which are expected to continue.
“The trade issue could still get worse before it gets better, but our view remains that a deal will ultimately be reached to resolve the issue given the economic (and in Trump’s case political) damage that would be caused if a deal is not reached,” Shane Oliver of AMP Capital said in a commentary.
MARKETS OVERSEAS: In China, Shanghai’s stock index fell 2.5%, its worst drop since a 5.6% plunge last week. The Hang Seng in Hong Kong lost 1.2%, and South Korea’s Kospi fell 0.6%. Japan’s Nikkei 225 was an outlier, up 0.9%.
European markets trimmed their losses from earlier in the day, in concert with the U.S. market. Germany’s Dax dipped 0.4% after earlier being down more than 1%. France’s CAC 40 slipped 0.1% , and the FTSE 100 in London was virtually flat.
OH DEERE: Agricultural equipment maker Deere had one of the biggest drops in the S&P 500 after it reported weaker earnings for the latest quarter than analysts expected and cut its forecast for sales and income this fiscal year.
The company may be feeling the effects of the U.S.-China trade war. CEO Samuel Allen said that farmers are becoming more cautious about making big purchases, citing “ongoing concerns about export-market access.”
Deere dropped 5.2%.
SEEKING SAFETY: When investors are nervous, they often turn to the safety of U.S. government bonds. When bond prices rise, their yields drop, and the yield on the 10-year Treasury fell as low as 2.36% Friday morning from 2.40% late Thursday.
Yields began to recover after the report on consumer sentiment came in stronger than expected, and the 10 year yield rose to 2.39%.
DISINTERESTED: Pinterest plunged after the tech company reported a larger loss for the latest quarter than analysts expected. Shares of the digital pinboard company, which began trading last month, dropped 10.8%.
AP Writer Annabelle Liang contributed from Singapore.