In this article:
KR
MDT
DIS

NEW YORK (AP) -- U.S. stocks wobbled between small gains and losses Tuesday as investors paused following several record-setting rallies.

The S&P 500 index is just below the record it set on Monday, its fourth in six days. The Nasdaq and the Dow Jones Industrial Average were also trading near the record highs they set on Monday.

Wall Street has been growing more optimistic as the U.S. and China appear closer to solidifying the first phase of a trade war truce.

Stocks have been posting solid gains in recent weeks. In addition to growing optimism that trade tensions will lessen, corporate profits haven't been coming in as badly as Wall Street expected and interest rates are expected to remain low following three rate cuts this year by the Federal Reserve.

Bank stocks were among the biggest winners as bond yields continued rising. Higher yields allow banks to make more money from interest on mortgages and other loans. Bank of America rose 1.1%.

The yield on the 10-year Treasury rose to 1.87% from 1.78% late Monday.

Supermarket operator Kroger surged 11.5% after giving investors a solid profit forecast.

KEEPING SCORE: The S&P 500 index fell 0.1% as of 12:05 p.m. Eastern time. The Dow Jones Industrial Average rose 45 points, or 0.2%, to 27,504. The Nasdaq rose 0.2%. The Russell 2000 index of smaller company stocks rose 0.2%.

TRADE WAR: Chinese President Xi Jinping has promised more gradual market-opening steps and reports suggest that the U.S. and China are considering rolling back more tariffs as they continue negotiations. Meanwhile, encouraging comments from Commerce Secretary Wilbur Ross about progress in trade talks helped to brighten sentiment.

Recently imposed tariffs have hurt manufacturers and are a lingering threat to technology companies.

ECONOMY: Investors have been encouraged by solid employment and consumer spending data. Those measures have been key drivers for sustaining the U.S. economy's decade-long growth. On Friday, the government released a surprisingly strong employment report for October. A survey released Tuesday showed surprisingly good growth in the services sector, which makes up the bulk of the U.S. economy.

INTEREST RATES: The Federal Reserve is expected to keep interest rates low after making its third cut this year. Low interest rates can goose economic activity. They also make stocks more attractive as investments relative to bonds.

The central bank has been cutting rates in an effort to help shore up U.S. economic growth threatened by the U.S.-China trade war and slower global economic growth.

EARNINGS SCORECARD: Corporate earnings have not been as bad as Wall Street anticipated. Investors had been preparing for a significant contraction of more than 4% in corporate profits, according to FactSet. But, most results have been surprisingly good and have tempered the forecast to a contraction of less than 3%.

Analysts are already looking ahead to 2020 and are forecasting solid growth.

ANALYST'S TAKE: The next steps in the U.S.-China trade war could determine whether the market continues its rally or retreats. Statements from officials and other reports suggest that both sides are on a path to resolving the dispute.

"The rumors have been bought and now we'll see what happens with the actual deal announcement," said Ben Phillips, chief investment officer at EventShares.

Investors are also closely watching gauges for consumer sentiment as the holiday shopping season nears, he said, to better measure the economy's health.

WEAK HEALTH: Medical device maker Becton Dickinson fell 3.7% after it gave investors a weak profit forecast for its 2020 fiscal year. Several other medical device makers also fell and weighed on the broader health care sector. Thermo Fisher fell 2.3% and Medtronic fell 1.9%.