Stocks Waver as Trade Tensions Persist


  • Chinese stocks bear brunt of trade worries
  • U.S. stocks little changed
  • Berkshire, Tyson Foods rise after reporting earnings

U.S. stocks swung between small gains and losses Monday, as investors continued to weigh the latest trade rhetoric against strong corporate results.

The Dow Jones Industrial Average was recently up 19 points, or 0.1%, to 25481, while the S&P 500 inched up 0.2%. Both indexes closed Friday with their fifth consecutive week of gains, bringing the S&P 500 about 1% below its January record. The Nasdaq Composite added 0.3% Monday.

Robust second-quarter earnings growth has lifted stocks despite escalating tariff threats from the U.S. and China. After China said Friday it planned to impose tariffs on a majority of its U.S. imports, President

Trump

tweeted over the weekend that “tariffs are working big time.” Mr. Trump has threatened to apply tariffs to all $505 billion of Chinese imports to the U.S.

Secretary of State

Mike Pompeo

faced criticism over the weekend from China and skepticism from Southeast Asian powers over U.S. trade policies.

Some analysts fear a trade war between the world’s two largest economies could slow the global economy. Those worries have roiled assets ranging from Chinese stocks to commodities, which some investors say would be more directly affected by a Chinese economic slowdown.

But so far, large U.S. companies have largely shaken off the impact of tariffs, reporting quarterly profit growth of more than 20% for the most recent period.

With trade concerns and U.S. earnings pulling investors in opposite directions, “it’s an unusual environment for markets,” said

François Bourdon,

chief investment officer of Fiera Capital.

Over the weekend, Warren Buffett’s

Berkshire Hathaway

said second-quarter net earnings surged, boosted by insurance underwriting and a change to accounting rules. Its shares rose 3.7%.

Tyson Foods

was among the S&P 500’s biggest gainers, adding 3.7% after the firm reported higher quarterly profit, despite challenges related to oversupply and pricing due to tariffs.

Facebook

shares climbed 3.7% after The Wall Street Journal reported that the social-media firm has asked large U.S. banks to share detailed financial information about their customers, including card transactions and checking-account balances, as part of an effort to offer new services to users.

Among decliners, consumer-products maker

Newell Brands

lowered its earnings guidance for the year after reporting falling quarterly sales. Shares fell 14%.

More than 80% of S&P 500 firms have already reported earnings, so traders are looking for fresh factors that swing stocks, analysts said.

“People are looking for what the next catalyst will be,” said Rob Bernstone, a managing director in equity trading at Credit Suisse Group. “Is it something geopolitical or is it a sector rotation?”

Investors are looking ahead to inflation data later this week, after some said Friday’s jobs report showed few signs of a pickup that would accelerate the Federal Reserve’s pace of interest-rate increases. On Monday, the yield on the benchmark 10-year U.S. Treasury note fell to 2.936%, according to Tradeweb, from 2.952% Friday. Yields fall as prices rise.

Investors seeking safety amid trade tensions have also favored the dollar. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, rose 0.2% Monday and is around its highest level in more than a year.

Elsewhere, the Stoxx Europe 600 dropped 0.1%. Germany’s economics ministry blamed trade uncertainty for helping drive manufacturing orders down 4% in June.

In Asia, the Shanghai Composite Index fell 1.3% to its lowest level since February 2016, and Japan’s Nikkei Stock Average edged down 0.1%. Hong Kong’s Hang Seng closed up 0.5%.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com



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