Stocks go in-out as U.S.-China trade relations hover market

Wall Street's main stock indexes moved in and out of positive territory on Tuesday as investors digested positive retailer earnings and economic data and eyed a key level for the benchmark S&P 500 index.

Concerns over U.S.-China trade relations also hovered over the market, as Secretary of State Mike Pompeo said President Donald Trump would reject a trade deal that was not perfect, but the United States would still keep working on an agreement. Optimism over a U.S.-China trade deal and over the Federal Reserve being less aggressive in raising interest rates have helped boost the S&P 500 by 11 per cent this year, but the index has struggled to move above 2,800.

"When you are here at that important level in the S&P 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," Krosby said.

The Dow Jones Industrial Average rose 19.77 points, or 0.08 per cent, to 25,839.42, the S&P 500 lost 0.47 points, or 0.02 per cent, to 2,792.34 and the Nasdaq Composite added 11.28 points, or 0.15 per cent, to 7,588.84. Communication services led gains among the 11 S&P 500 sectors, while energy lagged.

The consumer discretionary sector rose 0.5 per cent, led by a 7.8 per cent gain in Kohl's and 5.3 per cent gain for Target following those retailers' respective earnings reports. Target forecast 2019 profit above Wall Street estimates as investments to draw more shoppers online and in stores drove a jump in holiday sales, while Kohl's forecast full-year profit above Wall Street estimates.

In other corporate news, General Electric shares dropped 5.3 per cent as the conglomerate forecast an outright fall in free cash flow from its industrial business this year on the back of continuing weakness in its power unit. In economic news, sales of new U.S. single-family homes rose to a seven-month high in December, but November's outsized jump was revised lower, pointing to continued weakness in the housing market. Other data showed a rebound in growth in the vast services sector in February amid a surge in new orders.

Declining issues outnumbered advancing ones on the NYSE by a 1.01-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favoured decliners. The S&P 500 posted 8 new 52-week highs and 1 new low; the Nasdaq Composite recorded 33 new highs and 30 new lows.