Market Snapshot: Stocks struggle for direction as investors weigh strong data against trade-related uncertainty

Consumer sentiment rose to a 15-year high in May.

U.S. stocks bounced back from deep losses Friday, leaving major indexes to shift between gains and losses, as strong economic data helped to offset trade-related jitters after Chinese state media indicated little appetite by Beijing to resume negotiations following Trump administration’s move to raise tariffs on Chinese imports.

How are the major benchmarks performing?

The Dow Jones Industrial Average DJIA, -0.24% reversed direction to rise 16 points to 25,878 and the S&P 500 index SPX, -0.42% lost 3 points to 2,872. The Nasdaq Composite Index COMP, -0.76% declined 31 points, or 0.4% to 7,866.

At session lows, the Dow fell 204 points while the S&P 500 dropped 22 points, and the Nasdaq shed 72 points.

What’s driving the market?

Consumer sentiment rose to a 15-year high of 102.4 in May, well above the 97.1 expected by economists polled by MarketWatch and April’s reading of 97.2, according to the University of Michigan’s consumer sentiment index.

The Conference Board’s estimate of leading economic indicators rose for the third straight month in April to 112.1, up 0.2% from March, the group said Friday. The survey of economic conditions is a collection of forward-looking data that attempts to predict future economic growth.

A spokesman for China’s Ministry of Commerce called the Trump administration’s moves to raise tariffs last week, and the threat of additional tariffs on the roughly $300 billion in annually imported Chinese so far untouched by new duties, “bullying behavior,” that has resulted in “severe negotiating setbacks.”

Chinese state media also took aim at the Trump administration’s decision to put Chinese tech giant Huawei Technologies Co. on a list of entities that are working contrary to U.S. interests, which could result in U.S. companies needed to secure special permits to sell the company chips it relies on for end products.

See: Trump’s Huawei ban rattles shares of chip suppliers

Meanwhile, the U.S. and Canada on Friday said they reached a deal to end tariffs imposed by Washington on aluminum and steel products from Canada, while Canada will remove all retaliatory tariffs.

What are analysts saying?

“After three days of rallying, I think this morning’s opening weakness—and the lack of incrementally negative news — provided an opportunity for buyers who missed the move to step in,” said William Delwiche, an investment strategist at Baird, in emailed comments.

“Better than expected consumer sentiment data likely provided the motivation to do so. Whether this bounce goes anywhere remains to be seen, but there may be too many people hoping for a replay of last Friday’s late move higher,” he said.

The earlier weakness in stocks is the result of investors “not being used to seeing [trade] negotiations happen right before our eyes,” said J.J. Kinahan, chief market strategist for TD Ameritrade. “With everything so out in the open, and because nobody has any real insight into the final results of negotiations, the market moves back and forth on every public statement.”

“Despite yesterday’s rebound during the EU and U.S. sessions we are still reluctant to trust a long-lasting reversal in risk appetite,” wrote Charalambos Pissouros, senior market analyst with JFD Group in a note. “With the U.S. attacking China, and China willing to respond to any actions taken by the U.S., we cannot assume that the worst is behind us…we would like to see concrete ‘truce’ signals before we get confident that equities could scale back their recent losses.”

Which stocks are in focus?

Shares of Pinterest Inc. PINS, -12.15% sank 12% after the social media company announced first-quarter losses of $41.4 million which were three times as large as analysts had expected.

Hewlett Packard Enterprise Co. HPE, +0.86%  shares rose 1.5% after the company announced a deal to buy supercomputer manufacturer Cray Inc. CRAY, +20.53% for $1.3 billion. Cray shares soared 20%.

Shares of Deere & Co. DE, -7.37%  fell 6.4% after the agriculture, construction and turf care equipment maker reported fiscal second-quarter earnings that missed expectations and provided a downbeat outlook.

Nvidia Corp. NVDA, -2.17% shares slid 0.7% after the semiconductor firm reported earnings that beat severely lowered expectations for the first quarter. Nvidia, however, declined to reiterate a fully year forecast while indicating that demand for the data-center market remains week.

Share of Applied Materials Inc. AMAT, +3.58% gained 4.3% after the chip-and-display maker beat the consensus revenue and earnings expectations for the first quarter.

Chinese coffeehouse chain Luckin Coffee Inc. LK, +15.50% jumped 22% to trade above $20 a share after debuting on Nasdaq. The Starbucks rival priced its shares at $17.

How are other markets trading?

Stocks in Asia closed mostly lower, with the Shanghai Composite Index falling 2.5% and Hong Kong’s Hang Seng Index declining 1.2%. European stocks were under pressure, with the Stoxx Europe 600 retreating 0.4%.

In commodities markets, the price of crude oil CLM9, -0.13% erased earlier gains to retreat and gold GCM9, -0.80%  settled lower. The U.S. dollar DXY, +0.17% edged up while the British pound came under pressure after talks between the country’s Labour and Conservative parties ended without an agreement on how to leave the European Union, raising fears of a disorderly exit.

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