By Stephen Culp
NEW YORK (Reuters) – Wall Street struggled for direction and benchmark Treasury yields slid on Wednesday as disappointing earnings and mixed economic data counterbalanced easing jitters of a spreading global trade war.
The S&P 500 joined the tech-heavy Nasdaq in negative territory in the wake of disappointing earnings from Alphabet fueled doubts about the payoff of investment in artificial intelligence.
Simmering in the background are worries of escalating tit-for-tat tariff moves.
“We think the leaders of other countries don’t really understand Trump’s art of the deal,” said Jay Hatfield, CEO and portfolio manager at InfraCap in New York. “The threat of 25% was not meant to be the real tariff rate.”
“We think the tariffs are quite bullish for the stock market,” Hatfield added, saying that 5% or 10% tariffs across the board “will fund a major corporate tax decrease.”
Markets appeared to look past President Donald Trump’s eyebrow raising declaration that the United States would take over the Gaza Strip, a move that underscored the likelihood of market volatility under the new administration.
On the economic front, a stronger-than-expected ADP reading was offset by a surprise deceleration in the services sector, while record high imports pushed the U.S. trade deficit sharply wider.
The Dow Jones Industrial Average rose 71.80 points, or 0.16%, to 44,628.41, the S&P 500 fell 0.02 points, or 0.00%, to 6,037.71 and the Nasdaq Composite fell 42.30 points, or 0.21%, to 19,612.17.
European stocks reversed an early selloff and were last higher, powered in part by healthcare stocks as Novo Nordisk’s blockbuster drug Wegovy sales more than doubled in the fourth quarter.
MSCI’s gauge of stocks across the globe rose 2.27 points, or 0.26%, to 869.19.
The STOXX 600 index rose 0.36%, while Europe’s broad FTSEurofirst 300 index rose 7.22 points, or 0.34%Emerging market stocks rose 3.55 points, or 0.32%, to 1,096.53. MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 0.45%, to 576.91, while Japan’s Nikkei rose 33.11 points, or 0.09%, to 38,831.48.
U.S. Treasury yields dropped to their lowest level since mid-December in the wake of the disappointing services data, as investors continue to grapple with uncertainties arising from tariff skirmishes.
The yield on benchmark U.S. 10-year notes fell 8.9 basis points to 4.424%, from 4.513% late on Tuesday.The 30-year bond yield fell 9.2 basis points to 4.6556% from 4.748% late on Tuesday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 4 basis points to 4.174%, from 4.214% late on Tuesday.
The dollar softened as risk of a global trade war appeared to wane.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,fell 0.54% to 107.47, with the euro up 0.37% at $1.0415.Against the Japanese yen, the dollar weakened 1.31% to152.31.
The Mexican peso < MXN=> weakened 0.53% versus the dollar at 20.621.
The Canadian dollar strengthened 0.21% versus the greenback to C$1.43 per dollar.
In cryptocurrencies, bitcoin gained 1.24% to $97,701.41. Ethereum rose 4.32% to $2,754.13.
Oil prices dropped as rising U.S. supply and worries of a new Sino-U.S. trade war overshadowed President Trump’s renewed effort to eliminate Iranian oil exports.
U.S. crude fell 2.19% to $71.13 a barrel and Brent fell to $74.68 per barrel, down 1.99% on the day.
Gold resumed its rally as trade war jitters continue to attract investors to the safe-haven metal, sending it to fresh record highs.
Spot gold rose 0.97% to $2,869.39 an ounce. U.S. gold futures rose 0.62% to $2,871.10 an ounce.
(This story has been refiled to add the missing word ‘that’ in paragraph 6)
(Reporting by Stephen Culp, Editing by Nick Zieminski)
