William Geier, Jr., left, and David O'Day work at the New York Stock Exchange, Tuesday, Dec. 11, 2018, in New York. Stock markets around the world spiked higher Tuesday after Wall Street rebounded amid hopes the U.S. and China are back negotiating over their trade dispute. (AP Photo/Mark Lennihan)
U.S. stocks careened between big gains and modest losses on Tuesday before indexes ended the day mixed, the latest dizzying run for a market that's been dominated by them in recent months.
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A morning burst driven by hopes for U.S.-China trade talks gave way to losses triggered by falling bank stocks and the threat of a federal government shutdown. The result of Tuesday's trip through the spin cycle, though, belies all the action. Indexes ended the day nearly where they began.
The S&P 500 dipped by 0.94 points, or less than 0.1 percent, to 2,636.78, while the Dow Jones industrial average fell 53.02, or 0.2 percent, to 24,370.24, and the Nasdaq composite rose 11.31, or 0.2 percent, to 7,031.83. Slightly more stocks fell on the New York Stock Exchange than rose.
It's the latest in a series of sharp turns in direction for the market, which has lurched up and mostly down since late September as investors recalibrate how worried they are about the global trade war, rising interest rates and expectations for a slowing economy.
The whipsaw action is a nerve-wracking departure from much of the past decade, when investors enjoyed a largely calm, rising market, and analysts are debating how big a turning point it is for the longest bull market on record.
"It's the last gasps of a bull market," said Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments. Weiss has become more cautious about stocks as he's watched leadership shift from high-flying technology companies to makers of household products and other stocks that tend to do better in the late stages of a bull market.
Jon Adams, senior investment strategist at BMO Global Asset Management, is more optimistic that stocks can keep rising. But he says investors should get used to this increase in volatility, which follows a calmer-than-usual run.
"We came from a very low-volatility, benign environment in 2017, and I think we're getting to a more normal level of volatility, although a bit higher than historically," he said. "I think investors need to brace themselves for a higher level of volatility."
Behind that volatility is many forces pushing and pulling the market in different directions, and how optimistic or pessimistic investors are feeling about them on a given day. Several were on display Tuesday.
Early in the morning, the S&P 500 jumped as much as 1.4 percent after China's Commerce Ministry said that U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He spoke by phone about "the promotion of the next economic and trade consultations."
Media reports also said that China agreed to reduce tariffs on U.S. autos. That raised hopes that the two countries can make progress on their trade dispute. Investors worry weaker global trade would dent economic growth around the world and corporate profits.
Indexes veered to losses in the afternoon, hurt by falling bank stocks. Financial stocks in the S&P 500 fell at least 1 percent for the fifth straight day, and the S&P 500 was down as much as 0.6 percent at one point Tuesday afternoon.
Also weighing on the market was President Donald Trump's threat to shut down the government if Congress doesn't provide money to build a wall at the Mexican border.
In overseas stock markets, Germany's DAX was up 1.5 percent, and France's CAC 40 rose 1.3 percent. Britain's FTSE 100 gained 1.3 percent.
In Asia, Japan's Nikkei 225 lost 0.3 percent, South Korea's Kospi fell less than 0.1 percent to 2,052.97 and Hong Kong's Hang Seng edged up 0.1 percent.
Benchmark U.S. crude oil rose 65 cents to settle at $51.65 per barrel. Brent crude, the international standard, gained 0.4 percent to $60.20.
Natural gas fell 14 cents to $4.41 per 1,000 cubic feet, heating oil was close to flat at $1.85 per gallon and wholesale gasoline rose 2 cents to $1.44 per gallon.
Gold slipped $2.20 to $1,247.20 per ounce, silver rose 2 cents to $14.63 per ounce and copper rose 5 cents to $2.77 per pound.
The yield on the 10-year Treasury rose to 2.87 percent from 2.85 percent late Monday, while the two-year yield rose to 2.75 percent from 2.73 percent.
The gap between those two yields has been shrinking this year, which has worried some investors. When the 10-year yield falls below the two-year yield, investors call it an "inverted yield curve" and see it as a precursor to a recession.
In the currency markets, the dollar rose to 113.40 Japanese yen from 113.21 yen late Monday. The euro slipped to $1.1325 from $1.1353, and the British pound dipped to $1.2527 from $1.2557.