Wall Street ekes out gains after retail earnings; trade in focus

(Reuters) – U.S. stocks eked out modest gains on Tuesday on the back of upbeat quarterly reports from retailers and in anticipation of a U.S.-China trade deal as early as this month end.

Investors cautiously awaited more details on the progress in trade negotiations after U.S. Secretary of State Mike Pompeo said President Donald Trump will reject any deal that was not perfect, but added the United States will keep working on an agreement.

Wall Street began the day on a muted note after losing ground on Monday, when the S&P 500 failed to hold on to the 2,800-point mark for the second session in a row.

“There is anxiousness around the outcome of the trade negotiations,” said Brian Yacktman, chief investment officer at YCG Enhanced Fund in Austin, Texas.

The S&P 500 has climbed about 11 percent in 2019 and is now about 5 percent away from its Sept.20 record closing high, helped by a dovish stance from the Federal Reserve and on hopes the United States and China would soon hammer out a trade solution.

“We’ve had a nice rebound this year, but investors have to face the reality of the earnings fundamentals which continues to deteriorate,” Michael Geraghty, equity strategist at Cornerstone Capital Group in New York City.

Analysts now expect first-quarter earnings to fall 1.3 percent year-over-year, compared with prior expectations of 5.3 percent rise at the start of the year, according to Refinitiv data. It will be the first drop in quarterly earnings growth since 2016.

Target Corp jumped 5.1 percent, while Kohl’s Corp gained 7.7 percent after the retailers forecast annual earnings above expectations.

Their upbeat results along with Amazon.com Inc’s 0.49 percent rise pushed the consumer discretionary 0.66 percent higher, the most among S&P sectors. The retailing index rose 0.79 percent.

At 11:44 a.m. ET the Dow Jones Industrial Average was up 46.81 points, or 0.18 percent, at 25,866.46, the S&P 500 was up 2.56 points, or 0.09 percent, at 2,795.37 and the Nasdaq Composite was up 16.83 points, or 0.22 percent, at 7,594.40.

Four of the 11 major S&P sectors were trading lower, with the financial sector’s 0.34 percent fall leading the losses.

The sector was weighed down by losses in Wall Street’s big banks – JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co – which fell between 1 percent and 1.5 percent.

Among other stocks, Align Technology Inc’s tumbled 6.9 percent, the most among S&P 500 companies after the orthodontic device maker said it expects to take a charge in its current quarter.

Ctrip.com International climbed 20.3 percent after the Chinese travel website beat quarterly revenue estimates.

On the macro front, ISM’s non-manufacturing activity index showed a reading of 59.7 in February, better than estimates of 57.3, while another report showed new U.S. single-family homes rose to a seven-month high in December.

Declining issues outnumbered advancers for a 1.02-to-1 ratio on the NYSE and for a 1.07-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and one new low, while the Nasdaq recorded 24 new highs and 24 new lows.