Stocks struggle for direction as investors turn cautious amid 'September blues' – MarketWatch

U.S. stocks were little changed on Tuesday, as investors struggled to find fresh catalysts to drive the market higher, choosing instead to focus on simmering trade worries.

Major indexes moved between positive and negative territory throughout the session. Should the S&P 500 index and the Nasdaq Composite Index end in negative territory, that would mark their fifth decline of the past six sessions.

Where are the major benchmarks trading?

The Dow Jones Industrial Average DJIA, +0.28% rose 13 points, or less than 0.1%, to 25,871. The S&P 500 SPX, +0.21% lost less than one point to 2,877. The Nasdaq Composite Index COMP, +0.29% slipped 6 points to 7,919, a dip of 0.1%.

Last week was the S&P’s first negative week of the past four, marking the biggest weekly percentage drop since June, while the Nasdaq suffered its biggest weekly drop since March.

What’s driving the market?

Trade issues were simmering below the surface, as investors continued to watch the situation between the U.S. and China after President Donald Trump recently threatened China with fresh tariffs. The latest move by Trump would impact an additional $267 billion in Chinese goods, coming on top of an already-proposed $200 billion in tariffs. China has vowed to retaliate.

Meanwhile, China plans to ask the World Trade Organization next week for permission to impose sanctions on the U.S. for Washington’s noncompliance with a ruling in a dispute over U.S. dumping duties, Reuters reported. That’s part of a dispute that goes back to 2013.

Investors are worried about a full-on trade war that could have negative implications for global economic growth.

EU and U.S. negotiators met Monday to talk over a pact that would avoid a trans-Atlantic spat. Although there was no major breakthrough, U.S. Trade Representative Robert Lighthizer and European Trade Commissioner Cecilia Malmström said they would meet up again by the end of September and begin hammering out a deal in the coming months.

Investors are also facing negative seasonal issues, as the month of September is historically the weakest of the year, with an average loss of 1.05% since 1896.

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What are strategists saying?

“You have to watch the trade issue because global supply chains are so complex, and economic growth has depend on the efficiency of these chains,” said Tom Plumb, chief investment officer of Plumb Funds.

“Having said that, people talk about the trade issue as though nothing will happen, or as though the worst-case scenario will happen. We think it will be somewhere in between, and while I would stay away from emerging markets and China for a while, we have so much momentum in the U.S. that I would expect any correction to be short lived,” he said.

Plumb said he was using the recent weakness as an opportunity to buy stocks like Apple. “Any opportunity to have to buy this at a discount, you’ll be well served this year and next,” he said.

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Which stocks are in focus?

Yum China Holdings Inc. YUMC, -13.27%   sank 14% after Bloomberg reported that Hillhouse Capital was dropping its pursuit of operator of Pizza Hut and KFC fast-food restaurants in China.

Shares of Integrated Device Technology Inc. IDTI, +10.93%  surged 11% after Japan’s Renesas Electronics Corp. said it would buy the California-based chip maker in a $6.7 billion deal.

Sonos Inc. SONO, -18.48%  shares fell 18% after the speaker maker’s first earnings report since its initial public offering showed a net loss and sales that were worse than those reported in the same quarter a year ago. The speaker maker’s stock had rallied into the release, soaring 13% in Monday’s session.

Tesla Inc. TSLA, -3.92%  fell 2.4% after it was downgraded by an analyst who cited the “erratic behavior” of Chief Executive Elon Musk.

Sonic Corp. SONC, +9.18%  rose 7% after it gave an outlook that was above expectations.

Francesca’s Holdings Corp. FRAN, -32.09%  tumbled 31% and hit all-time lows after it reported fiscal second-quarter earnings and sales that missed expectations, and provided a downbeat outlook, citing “weak traffic trends.”

MasTec Inc. MTZ, +2.75%  said it had authorized a new $150 million stock repurchase program, the largest in the infrastructure construction company’s history. Shares jumped 4.4%.

Which economic reports are in focus?

Small-business sentiment climbed to a record in August, according to the National Federation of Independent Business. Separately, the number of job openings in the U.S. climbed to a record 6.94 million in July while the U.S. budget deficit in August was $211 billion, nearly double the gap during the year-ago period.

Reads on job openings and wholesale inventories for July will be released at 10 a.m. Eastern Time. Fed governor Lael Brainard and Minneapolis Federal Reserve President Neel Kashkari will speak on a panel about government-sponsored enterprises and housing in the financial crisis at 2:20 p.m. Eastern.

What are other markets doing?

Stocks in Asia had a mostly weaker day with the exception of Japan’s Nikkei 225 index NIK, +1.30% while European stocks SXXP, -0.13%  were sliding into the red along with U.S. stock futures.

Oil futures CLV8, +1.98% were higher, while gold GCZ8, -0.24% and the dollar index DXY, +0.12%  were softer.

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