U.S. Stocks Open Mixed on Earnings
April 25 2019 - 9:10AM
Dow Jones News
By Paul J. Davies
U.S. equities opened mixed Thursday, as investors continued to
weigh corporate earnings reports and poor economic data.
The Dow Jones Industrial Average fell 271 points, or 0.8%, to
26378 shortly after the opening bell, putting the index on course
for a second day of losses as shares of 3M tumbled on a
weaker-than-expected first-quarter earnings.
The S&P 500 dropped 0.1% and the Nasdaq Composite rose
0.4%.
The U.S. dollar crept up to its highest level in around two
years as economic data across the globe has turned weaker and
central banks, including the U.S. Federal Reserve and the European
Central Bank, have taken a dovish tone. Emerging markets felt the
ripples from that rally on Thursday with the Turkish lira, Russian
ruble and South African rand all sliding against the dollar.
The WSJ dollar index, which measures the dollar against a basket
of currencies, was up less than 0.1% at 91.11.
Elsewhere, the Stoxx Europe 600 index was down 0.2% and the
U.K.'s FTSE 100 dropped 0.6% as investors digested big falls in
revenue and profits in the first quarter from major banks UBS and
Barclays.
Shares of 3M fell 9.8% after the company reported first-quarter
profit and sales that missed expectations, slashed its full-year
guidance and said it would cut 2,000 jobs.
Microsoft's shares rose 4.6%. The software firm posted a 14%
increase in year-over-year quarterly sales, a larger rise than Wall
Street had anticipated.
Meanwhile, Tesla dropped 2.2% after the electric-auto maker
posted a quarterly loss that was wider than anticipated.
In Asia, the Korean Kospi index was down 0.5% after a
fourth-straight month of declining exports dragged on the local
economy. South Korean GDP shrank by 0.3% in the first quarter, its
worst performance in more than a decade. The result was a sharp
drop from 1% growth in the final quarter of 2018 and much worse
than expectations of 0.3% growth.
"The biggest quarterly contraction in Korean GDP since the
global financial crisis hit in fourth-quarter 2008 has to be bad
news," said Robert Carnell, chief economist in Asia at ING. "The
components of GDP weakness don't bode well for the quarter ahead.
It isn't hard to come up with a set of figures that would deliver
a...technical recession."
Stocks in China and Hong Kong were also lower even though the
Chinese central bank signaled support for the economy by saying it
had no intention of tightening monetary policy. Japan's central
bank was also supportive, revising its guidance to say it didn't
expect to increase interest rates for at least another year. The
Nikkei 225 rose about 0.5%.
Still, the Korean data has added to other weak numbers in recent
days, including worse-than-expected Australian inflation data and a
disappointing German business-climate survey.
Sweden is another country suffering unexpectedly low inflation,
which led its central bank on Thursday to delay its next expected
interest-rate rise, meaning it will now likely keep its main rate
at minus-0.25% for the rest of this year having previously
suggested a rise would come in the second half of 2019.
The Swedish Krona fell sharply against both the dollar and the
euro in response and was down more than 1% against both
currencies.
The steady drumbeat of signals has encouraged investors to put
more money into bonds than equities globally all year, according to
strategists at Barclays, lifting prices and pushing down
yields.
"Beyond the near-term reflationary effect of rising oil prices,
a hawkish shift [toward interest-rate rises] in central banks'
rhetoric is likely needed for bond yields to move much higher,"
they said.
U.S. 10-year Treasury yields also fell Wednesday, but were
marginally higher Thursday at 2.527% from 2.520%. Bond yields and
prices move in opposite directions.
Write to Paul J. Davies at paul.davies@wsj.com
(END) Dow Jones Newswires
April 25, 2019 09:55 ET (13:55 GMT)
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