US stocks end mixed, gold jumps amid upbeat IMF forecast, trade tensions

By Stephen Culp

NEW YORK (Reuters) -Wall Street closed mixed on Tuesday and gold touched a record high as investors weighed upbeat economic sentiment from the International Monetary Fund and Federal Reserve Chair Jerome Powell against revived U.S.-China trade tensions.

Stocks lost some momentum late in the session after U.S. President Donald Trump posted on social media that he was considering ending some trade ties with China.

The Dow reversed an early selloff to nab modest gains, while crude prices fell and benchmark U.S. Treasury yields eased.

The S&P 500 and the Nasdaq finished the session in negative territory.

Powell said in a speech on Tuesday that the overall U.S. economy "may be on a somewhat firmer trajectory than expected," while also cautioning that "there is no risk-free path for policy as we navigate the tension between our employment and inflation goals."

That echoed an IMF report which raised its global growth outlook as tariff shocks and financial conditions have proven more benign than expected. But the IMF warned that the trade war between the world's two largest economies could significantly slow output.

"What we have here is a market that has one ear constantly listening to the trade war rhetoric and then we have the other ear, which is in tune to the fundamentals of the stock market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

The U.S. and China began charging tit-for-tat port fees on Tuesday.

Bilateral trade tensions, which have rattled world markets this year, flared up late last week after China tightened controls on its rare earth exports. Trump retaliated by threatening to hike tariffs on Chinese imports into the triple digits.

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Upbeat quarterly results from high-profile financial firms including JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo kicked off third-quarter earnings season.

"If the banks are a guide, it will probably be a good earnings season," Cardillo added. "That's another supportive factor because to a certain degree, it validates the recent market highs." 

The Dow Jones Industrial Average rose 202.88 points, or 0.44%, to 46,270.46, the S&P 500 fell 10.41 points, or 0.16%, to 6,644.31 and the Nasdaq Composite fell 172.91 points, or 0.76%, to 22,521.70. 

European stocks closed lower as renewed U.S.-China trade tensions soured market sentiment, as investors eyed developments in France, where the prime minister appeared set to hold off on a key pension overhaul.

MSCI's gauge of stocks across the globe  fell 2.45 points, or 0.25%, to 978.64.

The pan-European STOXX 600 index fell 0.37%, while Europe's broad FTSEurofirst 300 index fell 7.41 points, or 0.33%.

Treasury yields declined but were off earlier lows, following Powell's speech and the IMF's revised growth outlook.

The yield on benchmark U.S. 10-year notes fell 2.3 basis points to 4.028%, from 4.051% late on Friday.

The 30-year bond yield  fell 1.1 basis points to 4.6234% from 4.634% late on Friday.

Oil prices dipped on trade war jitters and a report from the International Energy Agency which raised the prospect of increased supplies and dampening demand.

U.S. crude fell 1.33% to settle at $58.70 per barrel, while Brent settled at $62.39 per barrel, down 1.47% on the day.

The dollar eased while the Swiss franc and Japanese yen firmed due to heightened trade-driven risk.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.26% to 99.04, with the euro up 0.31% at $1.1604.

Against the Japanese yen, the dollar weakened 0.37% to 151.71.

Gold broke past $4,100, boosted by safe-haven demand arising from the latest salvo in the Washington-Beijing trade spat.

Spot gold rose 0.75% to $4,140.97 an ounce. U.S. gold futures rose 0.77% to $4,140.20 an ounce.

(Reporting by Stephen Culp; Additional reporting by Amanda Cooper in London; Gregor Stuart Hunter in Singapore; Editing by Timothy Heritage, Richard Chang and Deepa Babington)