US stocks have managed modest gains after holding near the unchanged mark for much of the session as enthusiasm over the US-China trade truce faded after the United States threatened tariffs on additional European goods.
Washington’s proposed tariffs on $US4 billion ($A5.7 billion) worth of European Union goods in an extended dispute over aircraft subsidies came just as trade tensions with China seemed to be easing.
Still, stocks have rallied to push the S&P 500 to a record for a second straight session on Tuesday following the US trade truce with China. The benchmark index finished Monday’s session well off its highs, however, as investors questioned the lack of details in the agreement.
The S&P 500 had rallied nearly 7 per cent in June on hopes the two largest economies in the world would find a way to end their trade war.
With US and global economic data showing signs of slowing, the focus for investors will now turn to monetary policy and the upcoming earnings season.
“We’ve got a wait and see on the trade deal, a wait and see on the Fed, a wait and see on earnings and all of that is in front of us by at least two weeks,” said Art Hogan, chief market strategist at National Securities in New York.
“I am not surprised at all to see this market shift into sideways action.”
The Dow Jones Industrial Average on Tuesday rose 69.25 points, or 0.26 per cent, to 26,786.68; the S&P 500 gained 8.65 points, or 0.29 per cent, to 2,972.98; and the Nasdaq Composite added 17.93 points, or 0.22 per cent, to 8,109.09.
The softening data triggered a drop of about 3 per cent in crude oil prices despite an agreement among oil producers to extend supply cuts and pushed the energy sector down 1.74 per cent, the biggest drag on markets. The defensive real estate, up 1.82 per cent and utilities, up 1.24 per cent sectors were the best performers on the session.
Oil majors Exxon Mobil and Chevron declined more than 1 per cent each, while Apache slumped more than 6 per cent.
Cleveland Fed president Loretta Mester, a Federal Reserve policymaker, on Tuesday expressed scepticism that a US interest rate cut is the right move until there are more signs the economy is moving to a truly weaker path.
Market participants still expect the Fed to cut interest rates at its July 30-31 policy meeting despite the latest developments in trade talks.
Automatic Data Processing lost 2.66 per cent, pressuring the tech-heavy Nasdaq, after market sources said brokerage Jefferies is re-offering 8 million of the company’s shares at a discount.
L3Harris Technologies gained 4.28 per cent, making it the best performer on the S&P 500, after Jefferies added the defence contractor to its top picks for aerospace and defence electronics for the second half of 2019.
Investors are now awaiting the monthly jobs report on Friday, which is expected to show the private sector added 160,000 jobs in June, after May’s sharp slowdown in jobs growth.
Advancing issues outnumbered declining ones on the NYSE by a 1.24-to-1 ratio; on Nasdaq, a 1.30-to-1 ratio favoured decliners.
The S&P 500 posted 41 new 52-week highs and 1 new low; the Nasdaq Composite recorded 65 new highs and 55 new lows.
About 6.36 billion shares changed hands in US exchanges, compared with the 7.02 billion daily average over the last 20 sessions.