U.S. stocks gain ground on trade optimism; oil climbs

NEW YORK (Reuters) – U.S. stocks advanced on Monday at the start of a heavy earnings week, while European shares overall were little changed, as investors took heart from potential progress in U.S.-China trade talks and escalating geopolitical tensions sent oil prices higher.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., July 16, 2019. REUTERS/Brendan McDermid

Tech shined as investors girded themselves for second-quarter reports from leading industrial and tech firms and looked ahead to the U.S. Federal Reserve’s expected interest rate cut later this month.

The South China Morning Post reported U.S. trade negotiators will likely visit China next week for their first face-to-face talk with Chinese officials since the G20 meeting, when Trump held off imposing a new round of tariffs on Chinese imports.

“The markets are reacting to the China news and that’s why you’re seeing a lift in semiconductors and tech,” said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York.

“It’s a very quiet summer-time market, and the market’s being pushed around by a little bit of news,” Pavlik added.

The Dow Jones Industrial Average .DJI fell 30.49 points, or 0.11%, to 27,123.71, the S&P 500 .SPX gained 3.05 points, or 0.10%, to 2,979.66 and the Nasdaq Composite .IXIC added 40.53 points, or 0.5%, to 8,187.02.

Growing tensions in the Middle East, coupled with lingering worries of a no-deal Brexit held world stocks flat.

The pan-European STOXX 600 index lost 0.01% and MSCI’s gauge of stocks across the globe .MIWD00000PUS shed 0.04%.

Brent crude prices LCOc1 edged higher on concerns that Iran’s seizure of a British tanker last week could result in supply disruptions.

U.S. crude CLcv1 rose 0.25% to $55.90 per barrel and Brent LCOcv1 was last at $63.00, up 0.85% on the day.

The dollar and euro were little changed as traders looked to policy decisions from the U.S. Federal Reserve and the European Central Bank regarding the pace at which they will cut interest rates, beginning with the ECB on Thursday.

“The market is coming to terms with a 25 basis point rate cut (from the Fed) at the end of the month, and that’s going to be seen as better than nothing,” Pavlik added.

The dollar index .DXY rose 0.08%, with the euro EUR= up 0.02% to $1.1222.

U.S. Treasury yields fell and the yield curve flattened as dovish Fed bank policy supported demand for government debt.

Benchmark 10-year notes US10YT=RR last rose 5/32 in price to yield 2.0325%, from 2.05% late on Friday.

The 30-year bond US30YT=RR last rose 17/32 in price to yield 2.5546%, from 2.578% late on Friday.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, July 19, 2019. REUTERS/Staff/File Photo

Gold steadied having slid 1% in the previous session on lowered rate cut expectations, but remained supported by global geopolitical uncertainties.

Spot gold XAU= added 0.2% to $1,427.41 an ounce.

Shipping prices jumped on strong vessel demand, with the Baltic Dry Index .BADI rising to a 5-year high.

Reporting by Stephen Culp; additional reporting by by Karin Strohecker in London; additional reporting by Sujata Rao in London and Shinichi Saoshiro in Tokyo; editing by Larry King and Nick Zieminski