S&P 500 slips slightly from record as trade-war concerns outweigh strong earnings

The S&P 500 pulled back Thursday from a record high after a report raised doubt about a long-term U.S.-China trade deal.

Bloomberg News reported Thursday, citing unnamed sources, that Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The report added Chinese officials are concerned about President Donald Trump's "impulsive nature" and the risk of him backing out of any kind of deal.

Trade bellwether Caterpillar slipped 0.5% while Micron Technology shares were down 0.9%.

Investors had been feeling optimistic about U.S.-China trade recently as both sides pointed to progress on a "phase one" accord being signed in November. China and the U.S. have been in a trade war since last year, slapping tariffs on billions of dollars worth of their goods.

Stocks came into Thursday's session following a banner day after the Federal Reserve cut interest rates by 25 basis points for the third time this year. Comments from Chairman Jerome Powell indicated that the central bank would be hitting pause on monetary policy easing for now, but there will be no hiking until inflation rises "significantly."

"This is appropriate strategy and despite the "pause" has created a runway for risk assets to continue to rally into [year-end]," said Tom Lee, founder and head of research at Fundstrat Global Advisors. "The Fed has done a much better job in 2019 of understanding the market's risks. Last year the Fed committed one of the largest policy errors in history raising in December."

Traders work on the floor at the New York Stock Exchange, October 28, 2019.

Brendan McDermid | Reuters

Strong earnings from Apple and Facebook slightly offset trade concerns and kept losses in check.

Apple shares rose 1.7% after the tech giant posted earnings per share of $3.03 on revenue of $64 billion. Analysts polled by Refinitiv expected a profit of $2.84 per share on sales of $62.99 billion. The company's iPhone and services revenues also topped estimates.

Facebook, meanwhile, climbed more than 4% after the social-media company reported a profit of $2.12 per share, topping a Refinitiv estimate of $1.91 per share. Facebook also reported stronger-than-expected average revenue per user.

So far, two thirds of the S&P 500 have reported quarterly numbers. Of those companies, 75% posted better-than-expected results, FactSet data shows.

In other corporate news, Italian-American automaker Fiat Chrysler (FCA) announced a landmark merger with French rival PSA Peugeot Citroen, which will create the world's fourth-largest car maker.

FCA will pay its shareholders a 5.5 billion euro ($6.1 billion) special dividend and the two companies will join forces through a 50-50 share swap. The new company's shares will be listed in New York, Paris and Milan.

—CNBC's Elliot Smith contributed to this report.

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