U.S. stocks traded lower Thursday after renewed worries about a U.S. – China trade deal, more evidence of a slowdown in manufacturing, and mixed corporate earnings, despite an interest rate cut by the Federal Reserve Wednesday.
The weaker tone comes a day after the S&P 500 scored a record close after the Federal Reserve on Wednesday cut interest rates for the third time this year, while also signaling that it would pause before making any further moves on monetary policy.
How are major indexes performing?
The Dow Jones Industrial Average DJIA,– 0. 74% was 234 points, or 0.8%, lower, at 26, 952, while the S&P 500 index SPX,– 0. 51% declined 20 points, or 0.6%, to trade at 3,0 27. The Nasdaq Composite Index COMP,– 0. 32% fell 39 points, or 0.5%, at 8, 265.
The S&P 500 ending the day up 9. (points, or 0.3%, at 3, 046. 77 – a record close. The Dow Jones Industrial Average rose 115. 27 points, or 0.4%, to close at 27, 186. 69, leaving it 0.6% away from its record close set on July 15. The Nasdaq Composite finished at 8, 303. 98, up 27. 12 points, or 0.3% – 0.3% off its record finish from July 26.
What’s driving the market?
Chinese officials are expressing doubts about their ability to reach a comprehensive, long-term trade deal with the U.S. despite progress toward signing a “phase one” agreement,Bloomberg reportedThursday. However, early Thursday President Trump took to Twitter to assuage fears that the cancellation of the Asia-Pacific Economic Cooperation meeting scheduled for next month, where the president and China’s Xi Jinping were expected to agree to a “phase 1” trade deal would impinge on progress in the trade talks.
In US economic data, there was more evidence of a slowdown in manufacturing with theChicago purchasing-managers index (PMI) fallingto 43 .2 in October from 47 1 in September, below the 48 .3 consensus expectation, according to Econoday.
The poor reading can be blamed in part to the recently-ended worker strike at General Motors, argued Joseph Brusuelas, chief economist at RSM,in a tweet. “But make no mistake about it the domestic manufacturing sector is in recession for reasons beyond the strike,” he wrote.
The number of Americans newly applying for jobless benefitsticked up by 5, 000to 218, 000 in the week ended Oct. 26, though remained near historic lows. Compensation costs for American workers rose 0.7% in the third quarter, the Labor Department said Thursday morning. Year-over-year, costs rose 2.8%, a slight increase from the 2.7% rise in June.
However,Americans increased spending in September for the seventh consecutive month, up 0.2%, while personal income rose 0.3%. Core inflation rose 1.7% last month, according to the Fed’s preferred PCE measure, down from 1.8% in August, and below the central bank’s 2% target.
“Recent green shoots have many investors asking: is global growth bottoming ?, ”Bank of America Merrill Lynch economist Ethan Harris said. “This, in turn, helped trigger a mini risk-on trade in markets. Unfortunately, we think it is too early to call a turn. While there have been a few hopeful signs in recent releases, overall the data are still weakening. ”
On Wednesday, the Fed, as expected, cut its benchmark interest rate for the third time in as many meetings on Wednesday, butsignaled it may pausebefore making further changes to its monetary policy settings to see whether those steps would be enough to sustain the economic expansion.
“The takeaway for investors was that while the Fed wants to pause, it will still cut rates if anything adverse happens, whereas it won’t raise them even if the economy picks up steam – which was enough to propel the likes of the S&P 500 to new record highs, ”said Marios Hadjikyriacos, investment analyst at XM, in a note.
On the corporate earnings front, reports fromApple I NC. AAPL, 1. 89% andFacebook Inc. (FB, 2. 39% released late Wednesday were well received. Facebook shares were up 2.5% after announcing results thatsoundly beat earnings forecastsand topped revenue expectations.
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Applereported profits in the third quarter dipped by 3%, which beat analysts’ expectations, even as iPhone sales fell by 9%, but the stock was up nearly 2% in early trade as the phone maker deliveredan upbeat holiday forecast. The company also bought back $ 78. 9 billion worth of its stock in the fourth quarter, up from $ 17 billion in the third quarter.
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So far , two thirds of the S&P 500 have reported quarterly earnings and of those 75% posted better-than-expected results, FactSet data shows.
What companies are in focus?
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Shares ofStarbucks Corp. SBUX,– 0. 57% fell 0.7% after the coffee chain reported fiscal fourth-quarter results that sawrevenue and same-store sales boostedfollowing the summer rollout of its Nitro Cold Brew beverage.
Shares ofMarathon Petroleum Corp. (MPC, – 1. 84% were down 3.1% after the energy company reported profit that beat expectations but missed on revenue, while announcing plans tospin off its Speedway businessand that its long-time chief executive plans to retire.
Shares ofTwitter Inc. ********************************************** (TWTR,) – 0. 62%) were also in the spotlight Thursday, off 0.8%, a day after the social media company said it wouldban most political advertisingfrom its service.
DuPontde Nemours, Inc. DD, 0. 44%, shares of which rose 0.8% after the materials companyreported a 26% decline in profitin the third quarter, less than analysts were expecting.
Bristol-Myers Squibb Co. BMY, 1. 94% shares gained 1.8% after the company beat earnings estimates but lowered its full-year per-share earnings guidance.
Kraft Heinz Co. KHC, 12. 61% shares rallied (*************************************************************************************************************************************************************************************. 4% in early trade Thursday after the food companyreported third-quarter earningsand sales that beat expectations.
Coffee-and-donut chainDunkin Brands Group Inc . DNKN, 5. (%) saidprofit rose for its third quarteras revenue increased from a year earlier. The company’s stock rose 5.4% Thursday.
Fiat Chrysler Automobiles NV (FCAU, 2. ******************************************************************************************************************************************************* (%) (FCA, 8.) % shares jumped 3.0% in Italy whilePeugeot SA UG,– 12. 86% shares fell nearly 13% in Paris after the two companies said they wouldcombine in a 50 – 50 Merger.
How are other markets trading?
The yield on the 10 – year US Treasury note (TMUBMUSD) *************************************************************************************************************************************************************************************** (Y,– 4. (%) fell 9 basis pointsto 1. 70%.
In commodities markets, the price ofWest Texas Intermediate crude oil (CLZ) ,– 1. (%) for December delivery fell $ 1. 00, or 1.8 %, to $ 54. 05 a barrel on the New York Mercantile Exchange. Thevalue of an ounce of goldfor December delivery GCZ 19, 1. 20%() rose $ 17. 10 or 1.1%, to $ 1, 513. 80 . The U.S. dollar, meanwhile, edged down 0.3%, according to the dollar index. DXY,– 0. 35%
In Asia overnight stocks traded mixed, with the China CSI 300 000300,– 0. 11% falling 0.1%, the Nikkei 225 NIK, 0. 37% adding 0.4% and Hong Kong’s Hang Seng index (HSI, 0. 90%() rising 0.9%. In Europe stocks were mostly lower, with the Stoxx Europe 600 SXXP,– 0. 49 % declining 0.4%.
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