US stocks steady but trade war fears linger, despite GDP data

U.S. stocks closed little changed Thursday but investors remained nervous about the impact of the trade war with China even though the latest data showed economic growth was healthy in the first quarter.

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U.S. GDP growth was revised down to 3.1 percent for the first quarter from 3.2 percent on weaker business investment but beat forecasts for 3.0 percent.

Earlier Chinese Vice Foreign Minister Zhang Hanhui accused the U.S. of "economic terrorism" when speaking to reporters in Beijing.  “We oppose a trade war but are not afraid of a trade war. This kind of deliberately provoking trade disputes is naked economic terrorism, economic chauvinism, economic bullying,” Zhang said, according to Reuters.

The possibility that Beijing may block exports of rare-earth minerals used in hi-tech products to the U.S., along with reports that U.S.-EU talks are making no progess are not helping investor sentiment.

Comments by Vice President Mike Pence did not help stocks late in the day. Speaking at a press conference after meeting Canadian Prime Minister Justin Trudeau, Pence warned China that US "could more than double tariffs if needed." Stocks gave up earlier gains and the U.S. ten year Treasury note yield slipped to 2.23 percent after Pence's comments.

TickerSecurityLastChangeChange %
I:DJIDOW JONES AVERAGES27846.66+80.37+0.29%
SP500S&P 5003105.29+1.75+0.06%
I:COMPNASDAQ COMPOSITE INDEX8501.403382-4.81-0.06%

On Wednesday, U.S. stocks fell to three month lows and bond prices rallied, while the U.S. ten year Treasury note yield down to 2.21 per cent, a 20 month low, on fears the trade war would undermine global economic growth.

U.S. stock indexes have fallen about 6 percent in May, but are still up 11 percent for the year.

The recent slide in U.S. Treasury yields brought the 30-year fixed-rate home mortgage rate down to an average of 3.99 percent in the May 30 week, from 4.06 percent, Freddie Mac said Thursday.

Federal Reserve Vice Chairman Richard Clarida said on Thursday that the U.S. economy remains “in a very good place” but indicated the central bank would be prepared to consider interest-rate cuts if economic data revealed a material risk of a sharper slowdown than officials currently expect.

The central bank’s No. 2 official also said the economy’s performance over the past year suggested the economy may have greater capacity to grow without pushing inflation to undesirable levels than Fed had previously forecast.

In company news, shares of Dollar General soared after it reported quarterly profit that beat analyst estimates. The discount retailer is planning to open more than 900 stores this year.

The board of CBS is preparing for talks with Viacom in June, according to media reports.  Viacom CEO Robert Bakish may manage the combined entity. Shares of both CBS and Viacom rose.

After the market close, ride sharing firm Uber Technologies Inc. reported a $1 billion loss for the first quarter, matching forecasts, while revenue  jumped 20 percent to roughly $3.1 billion.  Uber said its monthly active platform users rose 33 percent to 93 million in the first quarter, up from 70 million one year ago.

Concerns about Uber’s ability to achieve profitability, stave off competition from other ride-share firms and slowing revenue growth have weighed on the company’s stock since its lukewarm debut on the New York Stock Exchange earlier this month. Shares began trading below their $45 IPO range and have hovered at around $40 in recent weeks.

TickerSecurityLastChangeChange %
DGDOLLAR GENERAL160.31-0.47-0.30%
UBERUBER TECHNOLOGIES INC.29.55+0.10+0.32%
CBSCBS CORP.39.18+0.20+0.51%
VIABVIACOM INC.23.44+0.17+0.73%

Crude oil prices fell to two month lows Thursday after U.S. government data showed only a small decline in inventories along with an increase in crude production to a record. Oil prices are now down nearly 7 percent this month.

July West Texas Intermediate crude fell $2.20 to $56.59 barrel on the New York Mercantile Exchange.

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