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U.S. stocks edged lower in listless trading as disappointing economic data and reports the president will declare a national emergency overshadowed news that another government shutdown will be averted.

The S&P 500 Index fell, with a late-session drop sealing the decline initially sparked by a disappointing -- and contested -- report of the worst drop for retail sales in nine years. Initial jobless claims also came in higher than estimated. Signs Congress would avert another shutdown boosted sentiment midday and shares drifted until the late slide that came with news that President Donald Trump intends to sign a government funding bill and simultaneously declare a national emergency to get more money for a border wall.

Investors were surprised by the December sales data, which suggested economic growth is cooling and may reinforce the expectation that the Federal Reserve will avoid raising rates this year. But some observers suggested the retail figures, delayed four weeks due to the government shutdown, are out of sync with reality. More recent data on consumer comfort point to a robust buying climate in the U.S.

Three stocks fell for every two that advanced in the S&P 500. Bank stocks were among the hardest hit, as the 10-year Treasury yield briefly sank below 2.65 percent. Consumer staples also fell: Coca-Cola saw its biggest loss in 10 years after a disappointing forecast. On the positive side, energy companies advanced as crude prices climbed.

Trade tensions between the U.S. and China continue to weigh on stocks, with the two sides said to be far apart on reform demands as high-level talks begin in Beijing. A headline that the two sides remained far apart briefly sent the S&P 500 lower in late morning trading.

Food and industrial-goods shares had spurred the Stoxx Europe 600 Index amid a slew of company news, but the gauge tracked the early slide in U.S. equities and finished lower. Stock benchmarks drifted in Japan, China and Australia, and ticked lower in Hong Kong. European core sovereign bonds rose and the single currency strengthened after data showed the euro region’s biggest economy stagnated in the fourth quarter, but dodged recession.

Elsewhere, emerging-market shares fell. Oil advanced as falling shipments from Saudi Arabia and Venezuela offset gains in U.S. crude stockpiles. The British pound weakened while gilts advanced as Prime Minister Theresa May lost another round of Brexit voting in Parliament.

Here are some key events coming up:

  • Steven Mnuchin and Robert Lighthizer are in Beijing for high-level talks, and will meet China President Xi Jinping on Friday, the South China Morning Post reported.
  • U.S. Congress is close to voting on legislation to avert another partial government shutdown, with the Friday deadline quickly approaching.

These are the main moves in markets:

Stocks

  • The S&P 500 Index fell 0.3 percent as of 4 p.m. New York time.
  • The Dow Jones Industrial Average fell 0.4 percent and the Nasdaq 100 rose 0.1 percent.
  • The Stoxx Europe 600 Index fell 0.3 percent.
  • The U.K.’s FTSE 100 Index rose 0.1 percent.
  • The MSCI Emerging Market Index sank 0.1 percent.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.2 percent.
  • The euro rose 0.3 percent to $1.1299.
  • The British pound fell 0.4 percent to $1.2798.
  • The Japanese yen rose 0.4 percent to 110.54 per dollar.

Bonds

  • The yield on 10-year Treasuries sank four basis points to 2.66 percent, the biggest drop in two weeks.
  • Germany’s 10-year yield fell two basis points to 0.10 percent.
  • Britain’s 10-year yield fell three basis points to 1.15 percent, the lowest in 14 months.

Commodities

  • West Texas Intermediate crude rose 1.2 percent to $54.56 a barrel.
  • Gold futures were flat at $1,315.20 an ounce.

--With assistance from Andrew Dunn, April Ma, Adam Haigh, Jeff Kearns and Todd White.

To contact the reporter on this story: Reade Pickert in New York at epickert@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn

©2019 Bloomberg L.P.

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