U.S. shares finished Tuesday mostly flat before the meeting between U.S. President Donald Trump and Chinese President Xi Jinping.
The Dow Jones Industrial Average went up around 39 points with Caterpillar contributing the most gains. The S&P 500 finished the day almost even, with real estate dropping and energy outperforming. The Nasdaq composite also ended roughly flat on the day.
Xi and Trump will meet this Thursday and Friday at Mar-a-Lago. Trump said in a tweet that the meeting would not be easy because “we can’t have massive trade deficits…and job losses,” last week.
"While the fanatical optimism over Trump's proposed fiscal policies boosting U.S. growth has fueled the phenomenal stock market rally, the rising protectionist fears and concealed concerns over the pro-growth agenda falling short of expectations could catalyze an unexpected selloff," FXTM research analyst Lukman Ontunuga said.
One of Trump’s campaign promises is fair U.S. trade as he promised the U.S. would renegotiate trade deals he thought to be unfair. The administration has already moved forward to renegotiate the Nort American Free Trade Agreement with Mexico and Canada.
"Investors have certainly reverted to caution and that aspect of the market is going to be around for a while," First Standard Financial market economist Peter Cardillo said. "There's a lot happening this quarter and the market has already priced in all the good news."
The trade deficit of the U.S. narrowed in February to $43.56 billion, according to the Commerce Department. Economist expected it to have narrowed to $44.8 billion from a five-year high.
Equities traded higher earlier in the session following Trump’s clues at bank deregulation. Trump stated that his administration will make it easier for banks to lend money, adding they will do a “massive haircut” to Dodd-Frank.