By Stephen Culp
NEW YORK (Reuters) -Wall Street stocks oscillated and U.S. Treasury yields rebounded on Friday as investors assessed the health of regional banks and President Donald Trump said his face-to-face trade talks with Chinese President Xi Jinping are still on.
All three major U.S. stock indexes struggled for direction in early trading, but remain on course to notch weekly gains.
Benchmark Treasury yields and the dollar turned higher, while gold pulled back from all-time highs after a record run.
Worries over potential systemic credit problems in the banking sector abated the day after Zions disclosed it would take a $50 million loan loss in the third quarter and Western Alliance initiated a lawsuit alleging fraud by an investment firm.
The KBW Regional Banking index advanced 0.7% in a partial recovery from Thursday’s 5.0% plunge.
Trade tensions between Washington and Beijing were calmed by Trump’s assurances that his proposed 100% tariff on Chinese imports would not be sustainable. He confirmed he would meet with Chinese President Xi Jinping in two weeks in South Korea.
“We’ve had a turbulent market for about the past week or so with big up days followed by big down days,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “With the credit issues, and the U.S.-China trade war, there’s a lot of speculation going on, a lot of worry.”
Earnings being reported are overwhelmingly positive, however, Ghriskey added.
“The long-term outlook remains quite positive and from a longer-term perspective, things couldn’t be much better,” he said.
The first official week of the third-quarter earnings season is in the books, with 58% of companies in the S&P 500 having reported. Of those, 86% have delivered stronger-than-expected results. Analysts now expect third-quarter S&P 500 earnings growth of 9.3% year-on-year, up from 8.8% as of October 1, according to LSEG data.
The Dow Jones Industrial Average rose 70.91 points, or 0.15%, to 46,023.15, the S&P 500 fell 1.15 points, or 0.02%, to 6,627.92 and the Nasdaq Composite fell 42.60 points, or 0.19%, to 22,519.94.
European stocks slid, setting course for their biggest drop in over two months as global lenders were weighed down by worries about the health of U.S. regional banks.
MSCI’s gauge of stocks across the globe fell 3.75 points, or 0.38%, to 980.64.
The pan-European STOXX 600 index fell 0.85%, while Europe’s broad FTSEurofirst 300 index fell 19.20 points, or 0.84%.
Emerging market stocks fell 17.64 points, or 1.28%, to 1,361.32. MSCI’s broadest index of Asia-Pacific shares outside Japan closed lower by 1.3%, to 705.62, while Japan’s Nikkei fell 695.59 points, or 1.44%, to 47,582.15.
U.S. Treasury yields rose and the dollar strengthened as worries stemming from the escalating trade war and regional banks’ credit quality ebbed.
The yield on benchmark U.S. 10-year notes rose 2.9 basis points to 4.005%, from 3.976% late on Thursday.
The 30-year bond yield rose 1.8 basis points to 4.6015% from 4.583% in the previous session.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 3.5 basis points to 3.462%, from 3.426% late on Thursday.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.26% to 98.51, with the euro down 0.21% at $1.1663.
Against the Japanese yen, the dollar weakened 0.03% to 150.38.
Oil prices stabilized but remained on a path toward a weekly loss amid the fog of global supply uncertainty.
U.S. crude rose 0.02% to $57.47 a barrel and Brent rose to $61.08 per barrel, up 0.03% on the day.
Gold prices pulled back from record highs, pressured by a firmer greenback. Spot gold fell 1.73% to $4,250.40 an ounce. U.S. gold futures fell 0.78% to $4,246.70 an ounce.
(Reporting by Stephen Culp; Additional reporting by Ian Withers and Stella Qiu; Editing by Nia Williams)
