Stocks Waver on China Data
October 18 2019 - 12:49PM
Dow Jones News
By Max Bernhard and Alexander Osipovich
U.S. stocks fell Friday on global growth worries, but major
indexes were still poised to close the week with modest gains after
a strong kickoff to corporate earnings season.
The Dow Jones Industrial Average dropped 176 points, or 0.7%, in
afternoon trading, dragged down by Boeing and Johnson &
Johnson. The S&P fell 0.6%, while the Nasdaq Composite declined
1.2%.
Are three indexes are within 4% of all-time highs reached this
summer, showing the resilience of the U.S. stock market despite
concerns about slowing growth at home and abroad.
Friday's declines came after fresh Chinese growth data sparked
concerns about the world's No. 2 economy and a slew of negative
headlines pummeled some of the biggest U.S. companies.
Among Friday's movers, Johnson & Johnson slumped 4.7% after
the company said it was recalling a single lot of baby powder after
tests found small amounts of chrysotile asbestos. Boeing tumbled
3.5% after Reuters reported that the aircraft maker's employees may
have misled regulators over the safety of the 737 Max.
Technology stocks were broadly lower, with Netflix down 6% after
several analysts cut their price targets for the streaming-video
company. Chipmaker Micron Technology tumbled 4.4%, while Microsoft
fell 1.7%.
But the S&P was still poised for a 0.5% increase for the
week--its second consecutive week of gains--largely due to upbeat
quarterly earnings reports, including from banks like JPMorgan
Chase and Citigroup.
Of the 73 companies in the S&P 500 that have reported
earnings through Friday morning, more than four-fifths have topped
analysts' expectations, according to Refinitiv. That's largely
because expectations came down so much in recent months.
Coca-Cola, United Airlines Holdings and health-insurance giant
UnitedHealth Group are among the stocks that rallied this week on
better-than-expected results.
The parade of positive corporate news helped ease some of
investors' jitters over the trade dispute with China. Following an
initial deal last week, President Trump has said he could sign a
"phase one" deal with his Chinese counterpart Xi Jinping in
November.
"Some of the headwinds around concerns of a slowing U.S. economy
and trade tensions have slowed a bit this week," said Philip
Blancato, CEO and president of Ladenburg Thalmann Asset
Management.
Overseas, Chinese stocks dropped sharply after data showed the
Chinese the economy slowed further in the third quarter. The
benchmark Shanghai Composite Index fell 1.3%, its biggest decline
in a month.
Fresh data showed that China's economy grew 6% in the quarter as
business activity continued to deteriorate. Each quarterly slowdown
in Chinese growth has pulled the country's economic performance to
new lows not seen since the current measure of output was adopted
in 1992.
"The figures are painting markets in red today," said Ipek
Ozkardeskaya, a senior analyst at London Capital Group. "Pulling
below 6% would be really bad for investor sentiment, not only in
China, but globally."
The benchmark Stoxx Europe 600 fell 0.3%. In the U.K., the FTSE
100 dropped 0.4% and the pound climbed 0.4% against the dollar.
Investors are watching developments closely before U.K.
lawmakers vote Saturday on a draft Brexit agreement struck with the
European Union. Prime Minister Boris Johnson is trying to muster
enough support for the deal in the U.K. Parliament.
The yield on U.S. 10-year Treasurys fell to 1.741% from 1.757%
on Thursday. Bond yields move in the opposite direction from
prices.
In commodities, U.S. crude futures fell 0.6% to $53.59 a barrel.
Gold futures slipped 0.2%.
Write to Max Bernhard at Max.Bernhard@dowjones.com and Alexander
Osipovich at alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
October 18, 2019 13:34 ET (17:34 GMT)
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