U.S. stock markets closed basically flat on Tuesday, with two of the major stock indices notching in minor gains, after an earlier rally lost steam.
Markets started the day in the positive, with all major U.S. indices rising by about 1 percent at the open. It appeared that investors might be ready to shake off some of the worries over low oil prices and a slowdown in China.
But the optimism didn’t last.
Gains began to taper off as the day went on. By early afternoon, all three indices were in the negative. Those losses were reversed, and Dow Jones industrial average and Standard & Poor’s 500 notched in gains during the final minutes of trading.
At the close, the Dow was up 27.94 points, or 0.17 percent. The S&P 500 stock index, a broader measure of the largest companies, was up 0.05 percent. The tech-heavy Nasdaq, the only one to register a slight loss, was down 0.26 percent.
The mixed performance could be a sign that many investors are still skittish after watching U.S. stock markets dive last week — closing their worst-ever two-week start for a year.
Some investors may be looking to buy stocks while they’re cheap, analysts say. But markets might continue to slide until investors get more clarity about how the domestic economy will be able to handle any ripple effects of slower economic growth in China.
“People are trying to time this market, and they don’t want to buy in when stocks are falling,” said David Kelly, chief global strategist for JP Morgan Funds. “I think there’s a lot of nervousness about getting in too early when markets could correct some more.”
China reported Tuesday that its economy expanded by 6.9 percent in 2015, the slowest pace in nearly 25 years. Still, the numbers may not have been as bad as some economists and analysts had feared. The Shanghai Composite index, a benchmark index in China, rose 3.2 percent Tuesday and is down 15 percent for the year.
The International Monetary Fund also announced a lower forecast for global economic growth. It now predicts the economy will expand by 3.4 percent this year, down 0.2 percentage points from what it expected in the fall.
For investors in the United States, the uncertainty over global growth raises questions about whether the Federal Reserve acted too soon late last year when it raised short-term rates for the first time in nearly a decade.
When Fed officials meet next week, some investors may be looking for reassurance that the Fed will move cautiously in the wake of the increased volatility, said Phil Orlando, chief equity market strategist for Federated Investors. “Investors have to know that the Fed is not going to blindly hike rates in this environment,” he said.
Investors will also study corporate balance sheets for hints on whether the domestic economy may be able to stand on its own even as growth slows in China. Both Bank of America and Morgan Stanley reported fourth-quarter profits Tuesday morning, contributing to the initial rally.
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