The Dow Jones Industrial Average gives back its morning gains

Dow Jones

From Fred Imbert:

Stocks rose in choppy trading on Tuesday as investors tried to shake off trade worries following President Donald Trump’s latest remarks on the subject.

The Dow Jones Industrial Average traded 24 points higher, led by Visa. The S&P 500 climbed 0.1% as the communications services and tech sectors outperformed. The Nasdaq Composite advanced 0.4%.

Tech shares rose broadly as shares of Facebook, Amazon, Netflix and Alphabet all traded higher. Advanced Micro Devices added to tech’s gains, rising more than 10%. Visa, meanwhile, rose 1.8% after a Barron’s report highlighted the credit card company as a leader in the digital-payments space.

Consumer confidence data also helped offset negative sentiment. The Conference Board said consumer confidence rose this month to its higher level since November.

Trump said Monday the U.S. was “not ready” to make a deal with China, before adding he expected one in the future. Trump also said tariffs on Chinese imports could go up “substantially.”

Still, worries over U.S.-China trade talks prevented the broader market from posting sharp gains. President Donald Trump said Monday the U.S. was “not ready” to make a deal with China, before adding he expected one in the future. Trump also said tariffs on Chinese imports could go up “substantially.”

Trump’s comments come after a commentary piece in Chinese state-run newspaper Xinhua hinted China would not bend to U.S. demands change its state-run economy. The U.S. has raised concern over state-run companies and the forced surrender of intellectual property.

“Trump is playing a Game of Thrones with both foreign and domestic adversaries,” said Ed Yardeni, president and chief investment strategist at Yardeni Research. “Since he is the President of the world’s greatest economic and military power, he claimed that he will consummate lots of deals with them that will greatly benefit the US in short order. The results have been mostly disappointing so far.”

Trade tensions between the two countries escalated earlier this month as both countries hiked tariffs on billions of dollars worth of each other’s goods. The increasing tensions have pushed the S&P 500 down more than 4% in May through Friday’s close.

“These things usually don’t end well,” said Michael Katz, partner at Seven Points Capital. “Concerns are building and, if you’re a fund manager, you’re probably thinking of ways to hedge yourself and take some risk off the table.”

Investors have been piling into the traditionally safer Treasurys this month. The yield on the benchmark 10-year note fell to around 2.27%, its lowest level in 19 months.

Bank shares fell broadly amid the lower interest rates. Goldman Sachs dropped 1% while Citigroup and J.P. Morgan Chase fell 0.2% and 0.3%, respectively. Morgan Stanley and Wells Fargo also slipped.

Tesla shares, meanwhile, fell 0.1% after a Chinese official said China would prioritize domestic demand for rare earth metals. These metals are used in the building of Tesla’s car batteries.

“We still believe that a trade deal will be reached, although it may take many months,” said Bruce Bittles, chief investment strategist at Baird, in a note. “Both sides have too much at stake not to reach some form of an agreement as a trade war could throw China into a deep recession and the president needs a strong economy to keep enough support to win the 2020 election. For now, investors are cautiously optimistic but we are certain that volatility in the markets will continue.”

In corporate news, Fiat Chrysler shares rose more than 7% on news it is seeking a merger with French automaker Renault. Meanwhile, Total Systems Services rose more than 6% after agreeing to merge with Global Payments.

The SPDR Dow Jones Industrial Average ETF (DIA) was trading at $255.89 per share on Tuesday afternoon, down $0.23 (-0.09%). Year-to-date, DIA has gained 4.30%, versus a 6.34% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 82 ETFs in the Large Cap Value ETFs category.

This article is brought to you courtesy of CNBC.