Disney lifts Dow, S&P 500 to records while trade tensions cast shadow

(Reuters) - The Dow Jones Industrial Average and the S&P 500 posted record closing highs on Wednesday helped by a big jump in Walt Disney shares, but the Nasdaq fell as stocks were kept in check by fresh uncertainty over U.S.-China trade relations.

The Wall Street Journal reported during the session that U.S.-China trade negotiations have hit a snag over farm purchases, the latest development in a dispute between the two countries that has convulsed markets for more than a year.

The three indexes had all drifted higher earlier in the day after Federal Reserve Chairman Jerome Powell said U.S. central bankers see a “sustained expansion” ahead for the country’s economy.

Stocks have recently climbed to record levels, fueled by Fed interest rate cuts, third-quarter earnings exceeding low expectations and signs the economy is bottoming. But questions about an initial agreement to help resolve the U.S.-China trade dispute remain a key wild card.

“It’s still about China and investors trying to decide whether there’s a deal coming or not,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“It’s really left investors uncertain,” Meckler said. “They don’t want to sell into a possible announced deal, but they also don’t want to get whipsawed by, again, some disappointment over it.”

The Dow Jones Industrial Average .DJI rose 92.1 points, or 0.33%, to 27,783.59, the S&P 500 .SPX gained 2.2 points, or 0.07%, to 3,094.04 and the Nasdaq Composite .IXIC dropped 3.99 points, or 0.05%, to 8,482.10.

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Among the S&P 500 sectors, traditionally defensive groups such as utilities .SPLRCU, real estate .SPLRCR and consumer staples .SPLRCS ended sharply positive, while cyclical sectors, such as financials .SPSY, energy .SPNY and materials .SPLRCM, which are known for tracking the health of the economy, lagged.

“The leadership today is defensive,” said Mona Mahajan, U.S. investment strategist with Allianz Global Investors.

Investors also had their eyes on geopolitical developments, including presidential impeachment hearings in the United States and protests in Hong Kong.

Walt Disney Co DIS.N shares jumped 7.3% after the media company said its new streaming service, Disney+, had reached 10 million sign-ups since launching the previous day. Disney shares provided the biggest boost to the Dow and the S&P 500.

Shares of streaming rival Netflix Inc NFLX.O sank 3.0%.

SmileDirectClub Inc SDC.O shares slumped 20.3% after the teeth alignment company reported a bigger quarterly loss.

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About three-fourths of S&P 500 companies have topped earnings estimates in their third-quarter reports, but the companies are still expected to have posted an overall 0.5% decline in earnings, according to Refinitiv data.

Declining issues outnumbered advancing ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored decliners.

The S&P 500 posted 25 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 77 new highs and 124 new lows.

About 6.8 billion shares changed hands in U.S. exchanges, roughly in line with the daily average over the last 20 sessions.

Additional reporting by Arjun Panchadar and Agamoni Ghosh in Bengaluru; Editing by Bill Berkrot and Sonya Hepinstall