Markets mixed despite “solid earnings” amid trade and economic growth concerns

Markets were mixed on Wednesday.

The S&P 500 rose 0.2 percent but the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 fell 0.1 percent.

US investors were encouraged by corporate results, with IBM, for example, surging 8.5 percent after it announced a bullish outlook for profits.

“Bellwether S&P 500 companies are posting solid earnings, and the outlooks have been good,” said Jeffrey Kravetz, regional investment director at US Bank Private Client Reserve.

However, the trade tension between the US and China remained a concern amid reports that the US cancelled a trade planning meeting with China.

“The U.S. strategy might be to raise pressure on the Chinese ahead of the hard deadline in March, but this makes for uncomfortable interpretation by markets, and could potentially induce excessive volatility in the interim,” Chang Wei Liang of Mizuho Bank said in a commentary.

Michael Arone, chief investment strategist at State Street Global Advisors suggested that the “market is reluctant to overcome fears of slowing global growth, China-U.S. trade relations, and the government shutdown”, all of which “suggests challenges for stocks to move higher, despite earnings that have been better than expected”.

Meanwhile, Barry Bannister, head of institutional equity strategy at Stifel, thinks that US stocks face a “deep EPS ‘valley’ ahead” while Morgan Creek Capital founder and chief investment officer Mark Yusko said that US stocks must drop nearly 50 percent to reach fair value.