It was an uneventful day on Wall Street on Monday, with the major equity indexes rarely straying far from opening levels as the Street tried to interpret where the U.S.-China trade talks are going, along with potential congressional gridlock and a diminished 2019 earnings outlook.

The S&P 500 and the Nasdaq indexes had nominal gains while the Dow Jones Industrial Average closed well into the red.

Beijing and Washington most recently expressed optimism about trade negotiations between the world’s two largest economies, even as a Navy mission in the disputed South China Sea provoked China’s anger.

With two-thirds of S&P 500 companies having reported, the fourth-quarter earnings season approached the home stretch. So far, 71.2 percent have posted better-than-expected profits.

Fourth-quarter earnings growth is now estimated at 16.5 percent, up from 15.8 percent at the beginning of the year.

But first-quarter 2019 profit growth expectations have diminished. Analysts now see the year starting with quarterly earnings dropping 0.2 percent from last year, which would mark the first contraction since the second quarter of 2016.

Losses on Monday were concentrated. Of the 11 major S&P sectors, only communications services, utilities and healthcare closed in the red.

Tariff-sensitive industrial stocks provided the greatest lift to the S&P 500, led by Union Pacific Corp, General Electric and FedEx.

Healthcare stocks were the largest drag on the Dow, pulled down by UnitedHealth Group, Pfizer, and Merck each down more than 1 percent.

Shares of Tesla Inc were up 2.3 percent after Cannacord Genuity upgraded the stock to “buy” from “hold.” It said the electric automaker’s recent price cuts are helping achieve its goal of an affordable Model 3.

Apple was 0.6 percent lower after industry research firm IDC said in a report that iPhone sales in China fell by 20 percent in the fourth quarter.

Approximately 6.23 billion shares changed hands on the major domestic equity exchanges, as compared to the 7.43 billion share average over the past 20 trading days.

Public Confidence is Key

Keeping the public confident that inflation will remain under control is key to keeping price rises contained, San Francisco Federal Reserve economists said in a paper on Monday that also suggested the unemployment level is all but irrelevant to the inflation trajectory.

The unemployment rate is 4 percent, well below what most Fed policymakers see as sustainable, but inflation has barely touched the central bank’s 2 percent target. That’s been a puzzle for some at the Fed, many of whom continue to believe that a tightening job market will at some point put upward pressure not only on wages but also, less desirably, on prices.

The research from the San Francisco Fed, which is viewed as a leader in labor market research, could play importantly into the central bank’s thinking on interest rates.

The Fed last month left its benchmark overnight lending rate unchanged in a range of 2.25 percent to 2.50 percent, despite an apparent lack of slack in the labor market that might have raised red flags on the inflation front.

In their paper, the San Francisco Fed economists tested what would happen to inflation if the level of sustainable unemployment was 2 percentage points higher than currently thought, or if there were a lot less slack in the labor market than currently estimated.

The result was very little change to the inflation trajectory. But when the researchers modeled what would happen if inflation expectations were to rise, they found that very quickly, so too would actual inflation.

“Inflation dynamics today are primarily explained, not by economic slack, but by the public’s expectations that monetary policy will keep inflation close to the Federal Reserve’s target,” the researchers wrote. “Giving people a reason to doubt the central bank’s commitment to maintaining inflation near target is clearly costly.”