U.S. Stocks End Mixed as Trade War Concerns Ease: Markets Wrap

(Bloomberg) -- U.S. stocks erased deep losses to end the day mixed as White House officials left open the possibility that President Donald Trump's tariff proposals will spare neighbors from the most severe penalties. The dollar and Treasuries erased gains.

The S&P 500 Index was little changed after falling as much as 1 percent during a session marked by thin trading. Investors spooked by the departure of pro-trade adviser Gary Cohn took solace in comments from White House Council of Economic Advisers Chairman Kevin Hassett that indicated the trade policy is not yet finalized.

Trade angst still set the tone in U.S. equities, with multinationals in the Dow Jones Industrial Average leading declines, while domestically focused small caps paced gains. Treasuries pared an advance to trade little changed, while Bloomberg's dollar index fell versus the Canadian dollar after White House spokesperson Sarah Sanders said “there are potential carve outs” for the northern nation in the coming tariffs.

Elsewhere, crude fell toward $61 a barrel in New York. Investors also have their sights fixed on upcoming central bank decisions in Europe and Japan, ahead of Friday's U.S. jobs report.

“I think markets are taking a wait and see attitude. But I do believe markets will selloff a lot more if it becomes clear that we are going to start tariffs.” Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance, said by phone. “And if other countries are going to retaliate and people start to wonder how far this is going to go, I think that then there will be more of an impact on the market.”

While the imposition of severe levies on steel and aluminum may come as soon as this week, speculation remains that the tariffs may not spark a broader trade conflagration. The European Union has said it will retaliate in kind, while China has so far remained largely quiet. At the same time, Republican leaders in Congress have urged Trump to target only specific items and countries, adding to hope that a broader crackdown on trade will be avoided.

Here are some key events coming up this week:

• The Chinese People's Political Consultative Conference runs through March 15 and overlaps with the National People's Congress meetings in Beijing, through March 20.
• The ECB isn't expected to change policy on Thursday, but the Governing Council may discuss a change to pave the way for the end of quantitative easing.
• BOJ monetary policy decision and briefing on Friday.
• U.S. monthly payrolls data come Friday.

And these are the main moves in markets:

Stocks

• The S&P 500 Index fell less than 0.1 percent to 2,726.80 as of 4 p.m. New York time after dropping as much as 1 percent earlier in the session.
• The Dow Jones Industrial Average dropped 83 points to 24,801.
• The Russell 2000 Index rose 0.8 percent.
• The Stoxx Europe 600 Index gained 0.4 percent, third rise in a row.
• The MSCI Emerging Market Index dipped 0.4 percent.

Currencies

• The Bloomberg Dollar Spot Index was steady.
• The euro rose 0.1 percent at $1.2412.
• The British pound gained 0.1 percent to $1.3906.
• The Japanese yen advanced 0.1 percent at 106.07 per dollar.
• The MSCI Emerging Markets Currency Index increased 0.1 percent to the highest in more than a week.

Bonds

• The yield on 10-year Treasuries was little changed at 2.88 percent.
• Germany's 10-year yield decreased two basis points to 0.66 percent.
• Britain's 10-year yield fell three basis points to 1.494 percent.

Commodities

• West Texas Intermediate crude slid 2 percent to $61.37 a barrel.
• Gold slipped 0.7 percent to $1,325 an ounce.

--With assistance from Sarah Ponczek Todd White and Kailey Leinz

To contact the reporter on this story: Randall Jensen in New York at rjensen18@bloomberg.net.

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Samuel Potter, Jeremy Herron

©2018 Bloomberg L.P.