U.S. stocks finish little changed as rancor continues in Washington

U.S. stocks finished little changed on Wednesday as rancor continued in Washington and shipper FedEx issued a profit warning.

The Dow Jones Industrial Average lost about 0.1 percent while the S&P fell less than that. The Nasdaq Composite added nearly 0.1 percent for a record close.

Stocks have been rising steadily since late August. Not only are the major indexes having their best year since 2014, they are ending a strong 10 years. The S&P 500’s roughly 190 percent gain for the decade is the best since the boom years of the 1990s.

Yet despite all that, individual investors in the U.S. have pulled out of stocks amid lingering concerns about the economy’s strength and the outlook for global trade. Options traders are paying up for bets that the S&P 500 may fall in the coming months, highlighting the cautious approach taken by professional investors.

“This year has been a reluctant rally in a way,” said Supriya Menon, senior multiasset strategist at Pictet Asset Management. “Many investors have been on the sidelines.”

FedEx shares fell 10 percent, the worst drop by percentage in the S&P 500, after the delivery company cut its earnings targets for the fourth time in 2019.

The company is caught between spending to stay competitive in a changing market, and a pronounced slowdown in the manufacturing sector.

In Washington, Congress debated ahead of an expected vote on the impeachment of President Trump. While that debate could delay a vote into the evening, the market isn’t overly transfixed.

What does concern the market is the potential for the recent U.S.-China trade deal to fall apart.

“We envisage that a major re-escalation in trade tensions could trigger a 30 percent fall in U.S. equities,” Oxford Economic warned in a note to investors.

Elsewhere, General Mills rose 2.8 percent after quarterly earnings outpaced expectations on strength from its pet-food division. Cigna added 2.4 percent after New York Life Insurance agreed to buy Cigna’s group life and disability insurance business for $6.3 billion.

PG&E, which is still negotiating its bankruptcy plans, rose 3.8 percent after the company won court approval of a $13.5 billion settlement with victims of wildfires over the past few years.

U.S. crude oil prices rose less than 0.1 percent to $60.89 a barrel after the American Petroleum Institute released data Tuesday showing higher-than-expected levels of U.S. inventories. Investors will be looking out for Energy Information Administration data due out later Wednesday.

The pan-continental Stoxx Europe 600 index fell 0.1 percent as trading volumes edged lower ahead of the holiday season. Investors are also taking note of some weak economic data that was released earlier in the week. Key surveys showing manufacturing activity shrinking in the eurozone for 11 straight months in December.

“Output numbers have been quite weak,” said George Buckley, the chief U.K. and European economist at Nomura Holdings. “It might take time to revive. The surveys are not conducive to a quick turnaround.”

Within European equities, shares in Volvo AB rose more than 3 percent after it said it would transfer its Japanese truck business to Japan’s Isuzu Motors in a deal worth $2.3 billion.

The transaction comes as Fiat Chrysler Automobiles and Peugeot’s parent PSA Group agreed to binding terms for their merger.

Shares in PSA climbed 1.3 percent in Paris, while Fiat ticked up 0.4 percent.

The British pound declined 0.4 percent against the U.S. dollar a day after it posted its largest drop in more than a year. The currency has weakened amid concerns about the nation’s economic outlook if trading with the European Union were to be disrupted.

Asian trading was mixed. Japan’s Nikkei 225 closed 0.6 percent lower, with pharmaceutical and machinery stocks among the greatest losers, while Hong Kong’s Hang Seng Index rose 0.2 percent.

Source: The Wall Street Journal