Stocks slip, dollar gains as China cuts growth target
NEW YORK (Reuters) – A gauge of world stock markets recovered from early declines but was slightly lower on Tuesday as China cut its growth targets to a 30-year low but added more stimulus, while strong U.S. economic data sent the dollar to a two-week high.
Stocks on Wall Street traded in a like fashion, with the benchmark SP 500 a touch below the unchanged mark as investors looked for developments on trade between the United States and China. Positive retail earnings from Target Corp and data on the U.S. services and housing sectors helped provide support to the upside.
The Commerce Department said sales of new U.S. single-family homes rose to a seven-month high in December while a reading from the Institute for Supply Management showed an acceleration in growth in the vast services sector in February.
The SP 500 index has struggled to hold above the 2,800 level, which has proven to be a stiff resistant point. Still, the index is up nearly 19 percent from its Dec. 24 low.
“When you are here at that important level in the SP 500, it’s healthier to see the market slow down, pause, take account of the micro and the macro and absorb the good news,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
“To see the market pause right now, as opposed to a deep sell-off, is encouraging.”
European shares bounced between modest gains and declines, eventually closing slightly higher in the wake of China’s response to the lowered growth target of between 6.0 to 6.5 percent for 2019, which includes billions of dollars in planned tax cuts and infrastructure spending and a lack of news on the trade front.
The Dow Jones Industrial Average fell 13.02 points, or 0.05 percent, to 25,806.63, the SP 500 lost 3.16 points, or 0.11 percent, to 2,789.65 and the Nasdaq Composite dropped 1.21 points, or 0.02 percent, to 7,576.36.
Fatigue after a strong run higher for equities is playing a role in the recent pause. MSCI’s All Country World Index was down 0.07 percent, and has now risen more than 15 percent from its near two-year closing low on Dec. 24. The index is trading at 14.6 times expected earnings, on par with levels back in early October, when a global bear market began to take hold.
The pan-European STOXX 600 index closed up 0.15 percent.
In currency markets, the greenback was lifted by the economic data and is now up nearly 0.9 percent over the past five sessions.
The dollar index, tracking the unit against six major currencies, rose 0.16 percent, with the euro down 0.27 percent to $1.1306.
Oil prices were little changed as the market wavered on expectations for an imminent trade deal between the United States and China while awaiting U.S. government crude stocks data.
U.S. crude settled down 0.05 percent at $56.56 per barrel and Brent was last at $65.86, up 0.29 percent on the day.
(Additional reporting by Medha Singh and Lewis Krauskopf; Editing by Dan Grebler and Lisa Shumaker)