NEW YORK (Reuters) – Wall Street turned negative in indecisive trade on Thursday, giving up earlier gains as investors grappled with renewed trade worries and rising oil prices.
FILE PHOTO: Traders and guests gather for the IPO of PermRock Royalty Trust on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 2, 2018. REUTERS/Brendan McDermid
Comments by U.S. President Donald Trump that China “has become very spoiled on trade” added fuel to investor jitters as a second round of talks was launched today in efforts to avoid a tariff war between the world’s two largest economies.
Unrest in the Middle East suggested a reduction of oil supply and sent crude prices LCOc1 to their highest level in three-and-a-half years. The S&P Energy index .SPNY was up 1.2 percent, the largest gainer of the major S&P 500 sectors.
U.S. small-cap stocks fared better than their larger rivals as the Russell 2000 hit a record for the second session in a row, while bigger firms with more international exposure were pressured by rising oil prices and a strengthening dollar.
“It doesn’t surprise us at all,” said Marshall Gause, CEO and chief investment officer at Geneva Fund Partners in Denver. “If you’re looking for growth, small- to mid-caps may be the place to go if you can stomach the volatility.”
Trade and oil price concerns have also benefited smaller firms, according to Gause. “I think that they’re in a better place,” he said. “Global companies are more susceptible to that. Plus they’re more susceptible to increased energy prices, typically.”
Economic reports showed U.S. unemployment rolls falling to their lowest level since 1973 and mid-Atlantic manufacturers asking higher prices for their products, suggesting tightening labor market conditions and firming inflation, which support the likelihood of