Stocks mostly flat but earnings a positive; gold drops 5%

NEW YORK – Major stock indexes were mostly near flat on Tuesday, with upbeat results and forecasts from top US companies providing some support, while gold prices dropped more than 5% as investors took profits after a recent rally.

The yen fell to a one-week low after conservative Sanae Takaichi was elected as Japan’s prime minister. Japan’s Nikkei share gauge closed at a record high on Tuesday.

Spot gold fell 5.31% to USD 4,123.85 an ounce, and had its steepest daily percentage fall since August 2020. Prices scaled an all-time peak of USD 4,381.21 on Monday and have gained about 60% this year.

US President Donald Trump said he expected to reach a fair trade deal with Chinese President Xi Jinping when the two meet next week in South Korea, and played down the risks of a clash over the issue of Taiwan.

The prospect of a resolution also helped bolster investor sentiment, along with a deal between Australia and the United States for the supply of rare earths minerals.

In earnings, GM shares jumped after the company raised its full-year forecast, and Coca-Cola gained after the company posted results that beat analysts’ estimates.

But the S&P 500 technology sector was down 0.2%, and Michael Green, chief strategist at Simplify Asset Management in Philadelphia, said the reaction to some earnings surprises was modest.

“The earnings are better than expected as companies continue to gain slightly in terms of margins, which suggests that (companies) have to be passing through the tariffs or pushing the tariffs back onto the importers,” Green said.

The Dow Jones Industrial Average rose 218.16 points, or 0.47%, to 46,924.74, the S&P 500 rose 0.22 points, essentially flat, to 6,735.35 and the Nasdaq Composite fell 36.88 points, or 0.16%, to 22,953.67.

MSCI’s gauge of stocks across the globe fell 0.84 points, or 0.08%, to 994.85.

The pan-European STOXX 600 index rose 0.21%.

Against the Japanese yen, the dollar strengthened 0.81% to 151.96.

Takaichi became Japan’s first female prime minister and leader of its ruling Liberal Democratic Party on Tuesday.

Traders bet that Takaichi’s government could muddy the interest rate outlook and bring about greater fiscal spending.

The dollar also rose against other currencies. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was 0.35% higher at 98.95, with the euro down 0.33% at USD 1.1602.

US Treasury yields eased as investors looked ahead to the Federal Reserve’s next moves.

The Fed could deliver as many as three rate cuts in the next six months based on market-based expectations, while the European Central Bank, which meets next week, is not expected to deliver a rate cut any time soon.

The yield on benchmark US 10-year notes fell 2.9 basis points to 3.959%, from 3.988% late on Monday.

Investor confidence was hit hard last week as a clutch of bad loans at US regional banks ignited concern over credit risks that threatened to spill into the broader markets. The prolonged US government shutdown also weighed on risk assets.

Oil prices ended higher. Brent crude futures rose 31 cents, or 0.5%, to settle at USD 61.32 a barrel, while US West Texas Intermediate crude futures for November delivery, which expired on Tuesday’s settlement, closed up 30 cents, or 0.5%, at USD 57.82.

(Reporting by Caroline Valetkevitch; Additional reporting by Amanda Cooper in London and Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Will Dunham, Zieminski, and Jamie Freed)