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(Bloomberg) — US stocks pared earlier losses amid dip buying and short covering ahead of crucial corporate earnings results for some of the biggest technology firms.
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The S&P 500 Index and the Nasdaq 100 Index were little changed. The Dow Jones Industrial Average rose 0.3%. The Cboe VIX Index, a gauge of volatility, ticked above 25.
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US stocks fluctuated between gains and losses amid heightened concerns over the potential impact of US President Donald Trump’s trade policies after a widely followed measure of Texas manufacturing activity weakened the lowest level since May 2020.
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“The market’s struggles re-emphasize how much the narrative is being driven by the trade headlines, and technology stocks sit at the heart of the crosscurrents,” said Seema Shah, chief global strategist at Principal Asset Management. “In a week full to the brink of macro data, the April Dallas Fed manufacturing index is playing on investor fears that an economic slowdown is already upon us.”
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Traders also got little clarity from the latest tariff headlines. Treasury Secretary Scott Bessent told CNBC that the Trump administration has had “many countries come forward and present some very good proposals”, while not providing any information on specific deals.
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“Investors turned cautious after Bessent didn’t confirm the status of the tariff talks with China and as reports of less demand and importers holding off on shipping goods to the US suggest we may see some supply shocks,” said Adam Parker, founder of Trivariate Research.
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Risk-off moods were not equal across the stock market. The Russell 2000 Index rose 0.4%, outperforming other benchmark indexes. Goldman Sachs Group Inc.’s basket of money-losing tech stocks was up by 2.16%. The bank’s basket of most shorted stocks was gained 1.34%.
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Big banks strategists and trading desks remain devided on positioning. JPMorgan Chase & Co.’s trading desk is turning tactically bullish on US equities, predicting that tailwinds including Big Tech earnings and trade deal announcements will continue to lift stocks after the recent rout.
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To Citigroup strategists, the growth companies in the Nasdaq 100 index are a safer place to take shelter from market volatility than members of the Russell 2000, consisting largely of US small- and mid-cap firms.
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Morgan Stanley’s Michael Wilson says the weak dollar will support US corporate earnings, ultimately helping the American stock market outperform the rest of the world. At a time when many other Wall Street strategists are highlighting the new vulnerabilities around the concept of “US exceptionalism,” Wilson stands out for his view that the US is a better relative bet. He cited less volatile earnings growth and the fact that American companies are deemed to be higher quality as other reasons for his call.
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