The Dow Jones Industrial Average edged slightly higher in another choppy trading session Thursday, as investors weighed signs of improving trade relations, along with concerns about a creeping economic slowdown.
The blue-chip index climbed 70 points, or 0.3%, to 24597, losing some steam in afternoon trading after climbing more than 150 points earlier in the session. The S&P 500 fell less than 0.1%, while the technology-heavy Nasdaq Composite lost 0.4%, snapping a three-day winning streak. All three indexes are on course to end the week higher.
Broad losses among materials, financials and consumer-discretionary shares weighed on the S&P 500. Meanwhile, defensive stocks, such as utilities and consumer staples, added 0.9% and 0.7%, respectively. Real-estate shares rose 0.6%.
Thursday’s mixed trading session came after U.S. stocks rebounded Wednesday as The Wall Street Journal reported that China was set to introduce an industrial policy that is friendlier to foreign businesses. President Trump said on Twitter earlier in the week that “productive” trade talks were under way.
Still, investors remain skittish about how long the U.S. economy can continue to grow. Some analysts said the absence of major headlines this week has helped drive stock gains but has also created more uncertainty in markets.
“We’ve had a few surprising rallies this week, but it certainly doesn’t feel that way,” said Willie Delwiche, an investment strategist at Baird, referring to big intraday swings that rattled investors on Monday and Tuesday.
Missing leadership is one reason why stocks have struggled to maintain gains. Technology shares have slumped more than 12% in the S&P 500 so far in the fourth quarter. In the midst of recent market turbulence, investors have moved into so-called safety stocks such as utilities, which are the best performers this quarter, rising more than 7%.
“For the market to have a sustainable rebound, you have to see new leadership,” said David Spika, president of GuideStone Capital Management. “It’s probably not going to be technology, but health care could be that area.”
In addition to high-dividend-yielding, defensive stocks such as consumer staples, Mr. Spika said he has advised short-term investors to add exposure to health-care shares, which have posted strong earnings. The health-care sector has advanced more than 10% in 2018.
Meanwhile, Mr. Delwiche of Baird cautioned that investors are likely too optimistic that the Federal Reserve will strike a more dovish tone following its meeting next week.
Economists surveyed by The Wall Street Journal expect the Fed to raise its benchmark federal-funds rate to a range of 2.25% to 2.5%. But they dialed back their median forecast for a rise in borrowing costs in 2019, calling for two rate increases next year rather than the three they expected when surveyed last month.
“I don’t think the Fed will want to be seen as a hostage to the stock market,” Mr. Delwiche said. “Officials might be willing to stick to their guns in terms of their expected rate hikes a little bit more than the market anticipates right now, and that would bring more volatility.”
In Thursday’s action, shares of General Electric jumped 7.3% after JPMorgan Chase upgraded the stock to “neutral” from “underweight.” Separately, the struggling conglomerate reached a deal to sell off part of its GE Digital business and set aside the rest in a separate company focused on industrial Internet of Things software. Shares of the company have lost more than half of their value in 2018.
On the earnings front, Ciena topped Wall Street earnings and revenue estimates, sending shares of the networking-equipment maker 8.6% higher. Tailored Brands , the parent of apparel chain Jos. A. Bank, plunged nearly 30% after the company late Wednesday lowered its guidance due to weak sales at Men’s Wearhouse.
Meanwhile, the European Central Bank confirmed it would phase out its bond-buying program amid rising concerns about global growth.
The Stoxx Europe 600 fell 0.2%. In Asia, Japan’s Nikkei Stock Average rose 1%, while Hong Kong’s Hang Seng Index gained 1.3%.
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