Dow holds slim gains after downbeat eurozone data highlights global slowdown – MarketWatch

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U.S. stocks edged higher midday Wednesday, but remained close to break-even levels, as investors weighed downbeat data on eurozone manufacturing activity that underlined worries over the health of the global economy with news that Chinese officials played down the significance of the cancellation of visits to U.S. farm states — a move that had instigated losses in Friday’s session.

How are markets performing?

The S&P 500

rose 3 points, or 0.1%, to 2,995, while the Dow Jones Industrial Average

 was up 24 points, or 0.1%, to 26,944, after coming off session lows. The Nasdaq Composite

rose 6 points, or 0.1% to 8,117.

Major indexes posted moderate losses on Friday but booked gains for the week, with the Dow

 logging a 1.1% weekly advance. The S&P 500

 rose 0.5% last week, while the Nasdaq Composite

 rose 0.7%.

Stocks remain within striking distance of all-time highs, with the S&P 500 ending Friday 1.1% below its all-time closing high of 3,025.86 set on July 26. As of Friday’s close, the Dow was off 1.6% from its record close of 27,359.16 set on July 15, while the Nasdaq remained 2.6% away from its all-time settlement high at 8,330.21 from July 26.

What’s driving the market?

The market’s modest advance Monday was led by real estate and consumer staples stocks, defensive sectors that tend to outperform during periods of weaker growth.

Helping fuel concerns of an economic slowdown were data that indicated manufacturing activity in the eurozone contracted more sharply in September, posting its worst reading in nearly seven years. The flash eurozone manufacturing purchasing managers index (PMI) fell to an 83-month low of 45.6 in September, down from 47 in August. Economists polled by FactSet had forecast a 47.3 reading — a figure of less than 50 indicates activity declined.

In particular, Germany’s manufacturing PMI gauge fell to 41.4 in September, its worst reading in a decade. The biggest economy in the eurozone has been vulnerable to the deterioration of global conditions, drawing concerns that the export powerhouse will record its second consecutive quarter of negative growth from the June to September period, which would qualify as a technical recession.

“The manufacturing recession continues in Europe and possibly in China, although the sector is in better shape in the U.S.,” wrote Ken Berman of Gorilla Trades in a Monday note. “While most of the key sectors are in red, consumer goods and the defensive utilities sector have been performing relatively well, and tech stocks could also be ready to lead an afternoon rally.”

The cancellation of the visits to farms in Montana and Nebraska rattled stocks on Friday, along with remarks by President Donald Trump, who said he wanted a fully-fledged deal with China rather than a limited agreement that addresses particular grievances. But officials said talks would continue, as planned, in October, helping to soothe worries, analysts said.

Bloomberg News reported that Chinese officials had canceled the farm visit at the request of the U.S., and not because of a stalling of trade negotiations.

“At the end of the last week, trade talks were mostly positive with one major exception, the Chinese abrupt cancellation to visit a farm in Montana. While the news pretty much derailed the last attempt for U.S. stocks to hit fresh record highs, we should not see agricultural purchases be a key hurdle for the Chinese,” wrote Edward Moya, senior market analyst at OANDA.

Investors were also interpreting Markit’s take on U.S. activity, with its manufacturing index rising to a a five-month high of 51, while the services sector hit a two-month high of 50.9

The Chicago Fed’s national activity index recorded a positive reading of 0.1 in August, up from negative 0.41 in the previous month.

Which stocks are in focus?

McDonald’s Corp.

 shares were leading the Dow higher, up 1.3%, adding about 18 points to the blue-chip index Monday.

Shares of Amazon.com Inc.

 fell after Morgan Stanley analyst Brian Nowak cut his price target on the firm by 4% to $2,200 — even as the new target is 24% above current levels.

In company news, Caesars Entertainment Corp.

 said it reached an agreement to sell the Rio All-Suite Hotel & Casino to a company controlled by a principal of Imperial Companies for $516.3 million. Shares of Caesars were up 0.8%.

California utility PG&E Corp.

 were under pressure after the firm said it reached an agreement to resolve claims with entities representing 85% of the insurance claims from the 2017 Northern California wildfires and the 2018 Camp Fire.

Interactive Brokers Group Inc.

rose following an announcement by stock-market exchange IEX Group Inc. that it will exit the listings business. The online brokerage will return to the Nasdaq, its original listing venue, next month.

What are other market doing?

Global bond yields fell on Monday after investors keyed into weaker-than-expected eurozone data. The 10-year Treasury note yield

was down 8.2 basis points to 1.671%, while the 10-year German government bond yield

fell 7.2 basis points to negative 0.590%, Tradeweb data show.

Gold

rose 1.1% to $1,532.60 an ounce, while the greenback, as measured by the ICE U.S. Dollar Index

,

a gauge of the dollar against other major currencies, ticked up by around 0.1% to $98.61. Against the euro, the dollar strengthened by 0.1% to trade at $1.100.

In Asia overnight, the China CSI 300

 fell 1.1% and Hong Kong’s Hang Seng index

 fell 0.8%. Japan’s stock market was closed for a holiday.

— William Watts contributed to this article

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