U.S. stocks edged higher Tuesday following a three-day weekend as another round of U.S.-China trade talks begin in Washington. The market’s gains were led by the consumer staples and materials sectors.
What are major benchmarks doing?
The Dow Jones Industrial Average DJIA, +0.26% rose 10 points to 25,894 and the S&P 500 index SPX, +0.37% gained 4 points, or 0.2%, to 2,779. The Nasdaq COMP, +0.37% advanced 15 points, or 0.2%, to 7,488.
What’s driving the market?
Gains last week were fueled in part by upbeat expectations surrounding U.S.-China trade negotiations held in Beijing. Talks are set to resume this week in Washington, sparking hopes that the two sides can continue to make progress toward a deal.
President Donald Trump on Sunday tweeted about the trade talks, saying “Big progress being made on soooo many different fronts!”
Important meetings and calls on China Trade Deal, and more, today with my staff. Big progress being made on soooo many different fronts! Our Country has such fantastic potential for future growth and greatness on an even higher level!
— Donald J. Trump (@realDonaldTrump) February 17, 2019
Investors appeared to pay little attention to Trump’s declaration of a national emergency to pay for a wall along the U.S.-Mexico border. Sixteen states filed a federal lawsuit on Monday challenging the declaration.
Even as the Trump administration seeks a resolution to the standoff over U.S.-China trade relations, investors are also being forced to weigh the implications of a new study submitted Sunday to the White House by the Commerce Department that proposes the imposition of new tariffs on auto imports on national security grounds.
The recommendations contained in the report have yet to be made public, and administration has 90 days to decide whether to implement the study’s proposals.
Cleveland Federal Reserve Bank President Loretta Mester told an audience Tuesday at the University of Delaware that she expects economic growth and job growth to slow this year compared with last, but that she expects growth to be strong enough that the fed-funds rate “may need to move a bit higher than current levels.”
The National Association of Home Builders monthly confidence index rose 4 points to a seasonally adjusted rate of 62 in February, a four-month high, the association said.
What are analysts saying?
“We’ve had a market that has priced in a lot of good news,” Marvin Loh global macro strategist at State Street, told MarketWatch, adding that markets rallied recently on optimism surrounding trade talks.
“This could be one of those buy the rumors sell the fact sort of situations,” in which much of the trade-talk related gains for stock markets are already in the rearview mirror, he said.
“After the boost received from upbeat headlines with regards to last week’s U.S.-China trade talks, risk appetite eased somewhat, with negotiations set to continue in Washington this week,” wrote Charalambos Pissouros, senior market analyst with JFD Brokers, in a note. “Concerns over a potential escalation between the U.S. and the EU with regards to auto tariffs may have been one of the reasons behind the slightly softer investor morale.”
What stocks are in focus?
Shares of Dow component Walmart Inc. WMT, +2.59% were up 3.5% after the retailer reported fourth-quarter earnings and revenues that surpassed Wall Street expectations, while raising its annual dividend by 2%.
Advance Auto Parts Inc. AAP, -1.28% shares slid 0.6% after the firm reported fourth-quarter profits that topped analyst forecasts but saw same-store sales growth fall short.
Shares of Medtronic plc MDT, +0.28% rose 0.6% after the medical device manufacturer reported fiscal third-quarter profits and sales that beat analysts’ forecasts.
Weight Watchers International Inc. WTW, -3.43% shares dropped 3.1% after the stock was downgraded to underweight from neutral at J.P. Morgan, which also cut its price target on the stock to $25 from $37.
How are other markets trading?
Stock markets in Asia ended mixed, with Japan’s Nikkei 225 NIK, +0.10% edging 0.1% higher, while China’s Shanghai Composite Index SHCOMP, +0.05% lost 0.8% and Hong Kong’s Hang Seng Index HSI, -0.42% fell 0.4%.
In Europe, stocks were lower, with the Stoxx Europe SXXP, -0.22% down 0.2%.
Crude oil prices CLH9, +0.76% and the price of gold GCH9, +1.52% rose while the value of the dollar DXY, -0.30% relative to its peers, declined.
—William Watts contributed to this report
Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.