By Akane Otani and Michael Wursthorn
The S&P 500 edged higher Monday, led by industrial companies, even as trade tensions simmered ahead of another round of negotiations between U.S. and Chinese officials.
Aluminum-parts manufacturer Arconic and railroad company Norfolk Southern each rose more than 2%, triggering more modest gains throughout the S&P 500's industrial sector. Corporate news out of those companies precipitated the moves -- Arconic said Friday it would spin off one of its main two businesses, while Norfolk Southern unveiled a strategic plan that included boosting its dividend.
But investors appeared more focused on global economic concerns, chiefly how the U.S. and China will proceed with their trade spat. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are scheduled to meet China's vice premier later in the week in Beijing, leading many investors to avoid making any drastic changes to their portfolios. That pushed Monday's trading volume to the lowest level of the year, leaving major indexes relatively unchanged from Friday.
"There's this belief that this is going to very quickly resolve itself, and I think the reality is that there are very complicated long-term issues on the trade relationship between the two most powerful economies around the world," said Jonathan Golub, chief U.S. equity strategist at Credit Suisse.
Investors worry the talks could spark fresh volatility for financial markets, leading some to avoid making any major moves ahead of the negotiations. Stocks rose in January on fresh hopes that the U.S. and China would be able to carve out a trade deal, but some of that optimism appeared to lose steam last week as investors parsed a stream of downbeat economic data.
Although economic growth in the U.S. still looks relatively steady, Mr. Golub cautioned that an unexpected breakdown in trade talks remains a major market risk.
"I'm actually quite optimistic about the broad backdrop -- but that doesn't mean that there's no risk," he said.
The S&P 500 rose 1.92 points, or less than 0.1%, to 2709.80. The Dow Jones Industrial Average shed 53.22 points, or 0.2%, to 25053.11, while the Nasdaq Composite rose 9.71 points, or 0.1%, to 7307.90.
Gains throughout the S&P 500's industrial sector factored heavily into the broad index's small gain Monday.
Norfolk Southern added $5.49, or 3.2%, to $176.95 to lead the industrial sector higher after it unveiled a strategic plan focused on increased productivity and revenue growth, as well as achieving a dividend payout ratio of 33%.
Arconic rose 39 cents, or 2.3%, to 17.49 after the company said Friday that it would spin off either its aluminum-sheet rolling or aerospace-components unit.
Energy stocks in the S&P 500 also rose, giving the index additional support.
Communication stocks, meanwhile, were the biggest drag on the broad index, with the sector falling 0.6%. Videogame company Activision Blizzard fell 3.30, or 7.6%, to 40.11, while Take-Two Interactive Software shed 3.70, or 3.8%, to 93.44, extending their losses so far this month into the double digits on a percentage basis.
Missed earnings and weak outlooks for the year, partly due to the rise of mobile game "Fortnite," contributed to the rebuke from investors, analysts said.
Elsewhere, the Stoxx Europe 600 climbed 0.9%, while major indexes in Asia ended mixed. The Shanghai Composite jumped 1.4% to a two-month high, while Japan's Nikkei Stock Average was shut for a holiday and Hong Kong's Hang Seng Index rose 0.7%.
Write to Akane Otani at firstname.lastname@example.org and Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
February 11, 2019 17:26 ET (22:26 GMT)
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