Wall Street rallies on trade optimism

NEW YORK (Reuters) – Wall Street rallied on Friday, with the Dow and the Nasdaq posting their eighth consecutive weekly gains as investors grew hopeful that the United States and China would hammer out an agreement resolving their protracted trade war.

All three major U.S. indexes ended the session higher, and for the fourth straight session, the S&P 500 held above its 200-day moving average, a key technical level.

Talks between the United States and China will resume in Washington next week, with both sides saying progress has been made toward resolving the two countries’ contentious trade dispute.

Tariff-vulnerable industrials provided the biggest lift to the blue-chip Dow, led by bellwethers Boeing Co, 3M Co, United Technologies Inc and Caterpillar Inc.

“This may be just false hope with the tariff situation as thorny details still need to be agreed upon,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “It’s good news but its not over yet.”

Indeed, the trade row’s effects were reflected in Deere & Co’s earnings report, which came in below analyst estimates in part because of slowing international trade. The agricultural equipment manufacturer’s shares fell 2.1 percent.

“Solving the trade issue could give global growth the boost it needs,” Carter added. “Absent a tariff solution, growth will continue to slow.”

With nearly 80 percent of S&P 500 companies having reported, fourth-quarter earnings season is largely in the rearview mirror. Analysts now see a profit increase of 16.2 percent for the quarter, according to Refinitiv data.

Going forward, however, the outlook continues to worsen. First quarter earnings are currently seen falling by 0.5 percent, the first year-on-year decline since mid-2016.

The Dow Jones Industrial Average rose 443.86 points, or 1.74 percent, to 25,883.25, the S&P 500 gained 29.87 points, or 1.09 percent, to 2,775.6 and the Nasdaq Composite added 45.46 points, or 0.61 percent, to 7,472.41.

All 11 major sectors in the S&P 500 ended the session in the black.

The rate-sensitive financial sector led the S&P 500’s advance, bouncing back from Thursday’s sell-off as U.S. Treasury yields crept back up.

Shares of PepsiCo were up 3.1 percent even after the snack and beverage company forecast a surprise drop in full-year profit.

Nvidia Corp rose 1.8 percent following the company’s forecasts for its current fiscal year topped Wall Street expectations.

The chipmaker gave the second-largest boost to the closely-watched Philadelphia SE Semiconductor index, which was up 0.5 percent. The index has jumped nearly 18 percent so far this year.

Amazon.com shares were down 0.9 percent after scrapping its plans for a New York headquarters.

In fact, each of Amazon’s fellow FAANG members, a group of momentum stocks which also includes Facebook Inc, Apple Inc, Netflix Inc and Google parent Alphabet Inc also ended the session in the red.

Advancing issues outnumbered declining ones on the NYSE by a 3.66-to-1 ratio; on Nasdaq, a 2.58-to-1 ratio favored advancers.

The S&P 500 posted 47 new 52-week highs and no new lows; the Nasdaq Composite recorded 86 new highs and 16 new lows.

Volume on U.S. exchanges was 7.07 billion shares, compared to the 7.43 billion average over the last 20 trading days.

Source: Read Full Article

European shares recover after Mnuchin calls U.S.-China trade talks 'productive'

LONDON (Reuters) – Signs of progress from U.S.-China trade talks in Beijing helped European stocks reverse earlier losses on Friday, while auto shares continued to slide after figures showing an ongoing slump in European car sales.

The trade-sensitive German index, fell as much as 0.7 percent in early deals, but recovered to trade flat on the day after U.S. Treasury Secretary Steven Mnuchin said U.S. and Chinese trade negotiators had “productive meetings”.

The STOXX 600 rose to trade up 0.4 percent by 0950 GMT, after a tepid open following weak China inflation data.

“Year-to-date Europe has been doing surprisingly well in terms of market performance, but the data is still looking pretty bad,” said Martin Moeller, portfolio manager at UBP in Geneva.

Weak car sales data weighed on autos which tumbled 0.6 percent, the worst-performing sector. Car manufacturers BMW, Daimler, and Volkswagen were among the biggest fallers on the DAX.

European car sales dropped 4.6 percent in January, industry data showed, the fifth consecutive month of declines after tougher emissions test procedures became mandatory from the start of September.

Investors are also looking to a Feb. 17 deadline for the U.S. Commerce Secretary to release a report about whether European car imports pose a national security threat.

The European market was dragged down on Thursday by very weak U.S. retail sales data but was nonetheless on track for its first weekly gain in four, having hit a three-month high on Wednesday.

The Spanish government’s widely-expected decision to call a snap election did not move the IBEX which traded up 0.4 percent at 1000 GMT.

Some strong results helped the STOXX up.

French media giant Vivendi climbed 4.6 percent after reporting strong results for its Universal Music Group arm, and confirming it would soon select financial advisors to sell a stake of up to 50 percent in UMG.

“UMG has continued to deliver strong organic revenue growth with paid streaming accelerating quarter-on-quarter throughout 2018,” said UBS analysts.

Vivendi also announced its top stakeholder, billionaire Vincent Bollore, would further withdraw from the company’s management.

Bollore, another of the billionaire’s companies, climbed 4.6 percent.

German insurer Allianz managed a 1.1 percent gain after it reported results in line with expectations.

“We think the combination of operational strength and capital management discipline shines through once again,” wrote KBW analysts.

Telecom Italia was a top gainer, up 6.2 percent after a source said Italian state lender CDP has authorization to increase its stake in the firm to 10 percent within the next 12 months.

Eutelsat sank 7.7 percent, the biggest faller on the STOXX, after its first half results. A trader said the company’s CEO A talked down the possibility of consolidation in the industry.

Swedish defense firm Saab climbed 6 percent after its fourth-quarter earnings beat expectations and it forecast better margins and sales in 2019.

M&A also moved some shares.

German internet portal Scout24 surged up 12.6 percent to the top of the STOXX after it welcomed a higher offer from a private equity consortium of Hellman & Friedman and Blackstone.

Analysts at Liberum said the bid values Scout24 at too low a multiple, raising the possibility industry peers may look to buy some or all the assets.

Source: Read Full Article

China data deals another blow to European shares

LONDON (Reuters) – Weak inflation data from China sent European stocks slipping further on Friday, with car shares and Germany’s DAX the worst hit.

The German index, the most sensitive to China due to its large share of exporters, fell 0.6 percent with car manufacturers BMW, Daimler, and Volkswagen leading losses.

Europe’s STOXX 600 managed, barely, to hover flat as gains in telecoms and industrials helped offset the China strain.

Telecom Italia was another top gainer, up 7.5 percent after a source said Italian state lender CDP has authorisation to increase its stake in the firm to 10 percent within the next 12 months.

Eutelsat on the other hand sank 9.2 percent, the biggest faller on the STOXX, after its first half results. A trader said the company’s CEO A talked down the possibility of consolidation in the industry.

Swedish defence firm Saab climbed 6 percent after its fourth-quarter earnings beat expectations and it forecast better margins and sales in 2019.

The European market was already dragged down on Thursday by very weak U.S. retail sales data. It was nonetheless on track for its first weekly gain in four, having hit a three-month high on Wednesday.

M&A also moved some shares.

German internet portal Scout24 surged up 12 percent to the top of the STOXX after it welcomed a higher offer from a private equity consortium of Hellman & Friedman and Blackstone.

French media giant Vivendi climbed 4.6 percent after reporting strong results for its Universal Music Group arm, and confirming it would soon select financial advisors to sell a stake of up to 50 percent in UMG.

German insurer Allianz hovered around flat after it reported results in line with expectations.

Source: Read Full Article

Wall St. skids as bleak retail sales data clouds trade optimism

(Reuters) – U.S. stocks fell on Thursday, led by declines in consumer and bank shares, after bleak retail data fanned concerns about retailer earnings and led to increased bets of interest rate cuts, with losses capped by optimism over Sino-U.S. trade talks.

Retail sales tumbled 1.2 percent in December, the commerce department said, the largest drop since September 2009 when the economy was emerging from a recession. Economists polled by Reuters had expected an increase of 0.2 percent.

The disappointing data came ahead of earnings from big box retailers such as Walmart Inc next week, and PepsiCo Inc due on Friday.

Coca-Cola Co tumbled 7.6 percent after the world’s largest beverage company forecast slowing sales in 2019 and lower demand for its fizzy sodas in some markets.

The drop weighed on the S&P consumer staples, which declined 0.74 percent. The S&P retailing index fell 0.74 percent, dragged down by drops in Amazon.com and Home Depot.

“Today is a combination of data which shows the U.S. consumer may not be as strong as we thought and whether inflation is actually running a little hotter than expected,” said Yousef Abbasi, global market strategist at INTL FCStone in New York.

“Investors are still very much focused on the credibility of getting a China deal,” Abbasi said.

As the U.S.-China trade talks entered a higher level in Beijing, investors were seeking clarity. Top White House economic adviser Larry Kudlow gave an upbeat assessment on the talks, while Bloomberg reported that the negotiating teams were far apart on reform demands.

The weak data also pulled U.S. Treasury yields lower, sending financials down 1.3 percent. [US/]

Federal funds futures implied traders saw about a 15 percent probability the U.S. central bank would lower overnight interbank borrowing costs by a quarter point, up from 7 percent late on Wednesday. [MMT/]

Meanwhile, the U.S. Congress is looking to end a dispute over border security on Thursday with legislation that would ignore President Donald Trump’s request for funds to help build a border wall.

At 11:09 a.m. ET, the Dow Jones Industrial Average was down 139.14 points, or 0.54 percent, at 25,404.13. The S&P 500 was down 11.99 points, or 0.44 percent, at 2,741.04 and the Nasdaq Composite was down 12.38 points, or 0.17 percent, at 7,408.00.

The technology sector was flat, but chipmakers, which get a large portion of their revenue from China gained. The Philadelphia Chip rose 0.11 percent.

Cisco Systems Inc rose 3.1 percent after the network gear maker’s earnings beat estimates, driven by strength in its newer applications and security businesses.

Declining issues outnumbered advancers for a 1.22-to-1 ratio on the NYSE and a 1.14-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and one new lows, while the Nasdaq recorded 39 new highs and 20 new lows.

Source: Read Full Article

Wall Street extends gains as trade talks progress

NEW YORK (Reuters) – Wall Street extended its gains on Wednesday as investor optimism was stoked over hopes that the United States and China could iron out a trade deal, and tame inflation data suggested the Fed would hold interest rates steady in the near term.

All three major U.S. stock indexes were up, and the S&P 500 held above its 200-day moving average, a key technical level.

In Beijing, U.S. Treasury Secretary Steven Mnuchin said “so far, so good,” regarding ongoing talks aimed at resolving the U.S.-China trade dispute, adding that he hoped for “productive” meetings in the days ahead.

“The market is ahead of itself until we get a deal with China,” said Matthew Keator, partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “It seems to be a bit of a moving target, but it seems both sides are willing to construct a deal.”

The U.S. Labor Department reported that consumer prices were unchanged for the third consecutive month in January, and increased at their slowest annual pace in more than 1-1/2 years in a sign that the Federal Reserve could let interest rates stand for a while.

Fourth-quarter earnings season approaches the finish line, with more than two-thirds of S&P 500 having reported.

While analysts now see fourth-quarter earnings growth of 16.6 percent, the outlook for the current quarter is less auspicious.

Fourth-quarter profit is projected to fall 0.3 percent from a year ago, marking the first loss since the earnings recession that ended in 2016, according to Refinitiv data.

“Volatility in the fourth quarter was a precursor to what we’re seeing now,” said Keator. “Companies are resetting expectations going forward.”

The Dow Jones Industrial Average rose 90.76 points, or 0.36 percent, to 25,516.52, the S&P 500 gained 8.17 points, or 0.30 percent, to 2,752.9 and the Nasdaq Composite added 19.29 points, or 0.26 percent, to 7,433.91.

Of the 11 major sectors in the S&P 500, all but utilities were in positive territory.

Energy companies were among the biggest percentage gain as oil prices saw their largest increase since late January.

Groupon Inc sank 12.1 percent, among the biggest losers on the Nasdaq as reduced traffic led to a fourth-quarter profit miss.

Generic drugmaker Teva Pharmaceuticals Industries Inc dropped 7.8 percent after forecasting a weaker-than-expected 2019 due to new competition for branded drugs.

General Electric Co advanced 3.1 percent following news that the conglomerate booked the most orders for electricity-generating gas turbines in 2018.

Levi Strauss & Co filed documents for an IPO after more than three decades as a privately-held company. Rivals Abercrombie & Fitch, Gap Inc and American Eagle Outfitters Inc dropped on the news.

Cisco Systems’ stock was down 0.8 percent ahead of its earnings release, expected after the bell.

Advancing issues outnumbered declining ones on the NYSE by a 1.80-to-1 ratio; on Nasdaq, a 1.40-to-1 ratio favored advancers.

The S&P 500 posted 35 new 52-week highs and no new lows; the Nasdaq Composite recorded 67 new highs and 15 new lows.

Source: Read Full Article

Wall Street rises on trade hopes, deal to avoid government shutdown

NEW YORK (Reuters) – Wall Street rallied on Tuesday as investors were heartened by a tentative congressional spending deal to avoid another government shutdown and by positive developments in the U.S.-China trade negotiations.

All three major U.S. stock indexes gained more than 1 percent, and the S&P 500 traded above its 200-day moving average for the first time since early December.

President Donald Trump said he would be willing to let the March 1 tariff deadline slide as top U.S. officials arrived in Beijing for high-level talks later in the week to hammer out a solution to the trade dispute between the world’s two largest economies.

Congress cobbled together a tentative bi-partisan border security deal on Monday to avert another government shutdown, but the White House indicated that Trump has not yet decided whether to support it. Funding for the Department of Homeland Security and a host of other agencies is due to expire on Friday.

“It’s somewhat befuddling that the possibility of no government shutdown is driving prices up,” said Oliver Pursche, vice chairman and chief market strategist at Bruderman Asset Management in New York. “It means the narrative, pun intended, is trumping fundamentals,” he added. “We’re seeing swings based purely on emotion.”

The fourth-quarter earnings season is nearing the home stretch, with 70 percent of companies in the S&P 500 having already reported. Of those, 71 percent have beaten consensus estimates.

The outlook for 2019, however, is less rosy. First-quarter earnings are now expected to post a year-on-year decline of 0.3 percent, which would be the first loss since the earnings recession ended in the second quarter of 2016.

“I think it’s 50/50 as to whether we enter another earnings recession,” Pursche said.

The Dow Jones Industrial Average rose 376.06 points, or 1.5 percent, to 25,429.17, the S&P 500 gained 36.15 points, or 1.33 percent, to 2,745.95, and the Nasdaq Composite added 104.52 points, or 1.43 percent, to 7,412.43.

Tuesday’s gains were broad-based. Of the 11 major sectors of the S&P 500, all but real estate were trading higher. Technology stocks provided the biggest boost to the S&P 500, and they also led the Nasdaq’s advance.

Tariff-sensitive industrials headed up the Dow’s gain, led by 3M Co, Caterpillar Inc, United Technologies Corp and Boeing Co.

Amazon.com Inc provided the biggest lift to the S&P 500 and the Nasdaq, rising 2.6 percent after Walmart Inc ended its partnership with logistics firm Devi for a rival same-day grocery delivery service.

Electronic Arts Inc announced its Apex Legends video game has signed up 25 million players in the week since its release, sending its stock up 4.5 percent. The video game maker’s shares have soared by nearly 27 percent since the game’s release.

Shares of Goldman Sachs Group were up 2.0 percent after bank chief David Solomon, speaking at a conference in Florida, said the firm intends to increase its mid-size corporate client roster over the next few years.

Under Armour Inc jumped 6.4 percent after the sportswear company beat analysts’ profit forecasts for the holiday quarter.

Advancing issues outnumbered declining ones on the NYSE by a 3.48-to-1 ratio; on Nasdaq, a 2.97-to-1 ratio favored advancers.

The S&P 500 posted 42 new 52-week highs and one new low; the Nasdaq Composite recorded 67 new highs and nine new lows.

Source: Read Full Article

Weak construction, chemicals earnings hold Europe back while L'Oreal impresses

LONDON (Reuters) – European stocks slipped again on Friday, following their weakest day in six weeks, as downgrades to growth forecasts weighed and bleak numbers from Umicore, Skanska, and Rockwool outweighed a sales beat at L’Oreal.

The pan-European STOXX 600 was down 0.1 percent as of 1010 GMT, with most of the action at the level of individual stocks. The index was on track for its worst week in six.

Markets were hit on Thursday by U.S. President Donald Trump saying he did not plan to meet Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal.

Growth worries in Europe also spiked after the European Commission downgraded its growth forecasts.

“The trade issue is more in focus in the short term. Macro data over the last few weeks hasn’t given any reason to be more concerned about a recession than a month or two ago,” said Paul Harper, equity strategist at DNB.

“The cycle is pretty mature now but it’s always pretty difficult to know how close to a recession you are when indications are not showing signs that it’s around the corner,” he added.

French cosmetics giant L’Oreal said strong demand for luxury skin creams helped it beat fourth-quarter sales forecasts – another company reporting better-than-feared demand from China after LVMH last week.

“L’Oréal is capitalizing on very strong skin care growth, booming Luxury markets, strong demand in Travel Retail channels and the shift to online,” wrote Liberum analysts.

Its shares rose 1.2 percent in early deals before giving back gains to trade up just 0.4 percent. Traders put the move down to profit-taking after a strong run – L’Oreal hit a record high on Feb 5.

Luxury handbag maker Hermes gained 0.7 percent after it also said sales momentum in its Chinese stores stayed strong.

Swedish electronics group Dometic shone, topping the STOXX with a 13-percent jump after reporting fourth-quarter profit rose and giving a positive outlook for 2019 sales growth.

On the flip side, Belgian chemicals and cobalt refiner Umicore fell 4.8 percent after saying it expected 2019 growth to be hit by subdued demand in cars and consumer electronics, and R&D costs.

Analysts said the company’s lack of quantitative guidance for 2019 weighed on sentiment.

Construction was a weak spot with Denmark’s Rockwool sinking 12 percent after full-year earnings missed expectations, and Sweden’s Skanska losing 7.8 percent after it cut its dividend and lagged profit estimates.

Autos fell 0.3 percent, extending losses from Thursday when the sector suffered its biggest one-day drop since the Brexit vote aftermath in June 2016.

Tata Motors warned Jaguar Land Rover would swing to a loss due to weak sales, and that latest negative news on car demand weighed on auto suppliers Valeo and Faurecia, down 2.6 to 3 percent.

Adding to the negativity around autos, German car wiring supplier Leoni sank 25 percent after delivering a significant miss to fourth-quarter earnings expectations.

Swiss business services company DKSH fell 4.4 percent, extending Thursday’s losses after it reported earnings down 11 percent, lagging estimates.

Overall, Europe is on track for its weakest quarter for earnings growth in three years, but investors have been more forgiving to companies with valuations low and expectations at rock bottom.

“The question now is what can provide the catalyst for another leg up from here,” said DNB’s Harper. “At the moment earnings revisions are not particularly encouraging.”

Source: Read Full Article

U.S. fund managers brace for consumer slowdown

(Reuters) – With expectations for slowing growth escalating, U.S. fund managers are selectively avoiding stocks in consumer companies as lofty valuations, concerns about declining earnings estimates, and consumer confidence keep them on guard.

Low U.S. unemployment and rising wages should point to a healthy consumer, but worries about global growth, domestic U.S. politics and a U.S.-China trade war have been wearing on consumer and investor moods.

Wall Street expects fourth-quarter earnings growth of 14.7 percent for the S&P 500’s consumer discretionary index – below the 17.8 percent consensus from October at the beginning of the fourth quarter, according to data from Refinitiv as of Friday morning.

And for the first quarter, analysts expect discretionary earnings to fall 1.7 percent, compared with expectations for 6 percent growth on Oct. 1.

For consumer staples, fourth-quarter earnings are expected to grow 4.2 percent, down from the 6.7 percent consensus in October, with 0.7 percent growth expected for the first quarter.

In comparison, the broader S&P benchmark is expected to report fourth-quarter earnings growth of 16.8 percent and decline 0.1 percent in the first quarter.

“Our thoughts on the global consumer is that the marginal data points coming in are more negative than positive,” said Eric Freedman, Chief Investment Officer at U.S. Bank Wealth Management in Minneapolis. His firm is “market weight to slightly underweight” on consumer discretionary while it views consumer staples valuations as “fair to slightly over valued.”

U.S consumer confidence fell to a 1-1/2 year-low in January as a partial shutdown of the government and financial markets turmoil left households nervous, according to a Conference Board survey.

Shawn Kravetz, Esplanade Capital LLC’s chief investment officer, said while the “consumer remains generally robust, most people have had something in their life in the past few months that has given them pause.”

“For the wealthy it was watching the stock market go down 15 percent in the fourth quarter,” Kravetz said. “For government workers, it was weeks of no cash flow and uncertainty. For many it was the uncertainty of the shutdown and what the secondary effects might be to them directly, to their jobs or businesses, or the economy at large … everyone was touched directly or indirectly. That didn’t pop the bubble but certainly let a little air out.”

Like other investors, Kravetz is largely avoiding consumer stocks because of their valuations.

The consumer discretionary index trades at roughly 19.8 times forward earnings estimates compared with 17.3 for consumer staples and a 15.8 multiple for the broader S&P, according to Refinitiv data.

“You’re paying more for less growth,” said Burns McKinney, a portfolio manager at Allianz Global Investors in Dallas. His firm holds stocks in consumer companies including Target Corp and General Motors but is underweight the broader discretionary and staples sectors.

Companies that have yet to report their earnings include Coca-Cola Co, PepsiCo Inc, Newell Brands Inc, and Walmart Inc, which fit into the staples category, while discretionary companies that have yet to report include retailers such as Home Depot Inc, Macy’s Inc, Gap Inc and Target.

“The big retailers like Walmart are fairly valued with solid expectations but also with some risks,” Kravetz said. “The brands like Coca-Cola and Pepsi are mostly near their highs as safety in storms but with enough risks to keep us away. The stores like Macy’s and Gap are challenged.”

Jharonne Martis, director of consumer research at Refinitiv, said retail growth is still healthy, but because growth was “significantly stronger” earlier in 2018, “some of the stocks could be punished” when retailers report earnings.

“We’re already seeing that consumer confidence has lowered and analysts have been lowering expectations for 2019,” said Martis.

So far, 71 percent of consumer discretionary firms have beat Wall Street’s fourth-quarter earnings expectations, with more than half of the results already released. About 64 percent of staples companies have beat estimates, with reports out from two-thirds of the sector, according to data from Refinitiv.

A major challenge to first-quarter numbers for consumer companies was the 35-day partial U.S. government shutdown, when hundreds of thousands of federal workers went without paychecks.

Because of the shutdown, government data releases were delayed. The U.S. Commerce Department’s Census Bureau announced earlier this week that it would release December’s retail sales report on Feb. 14.

In a recent Reuters poll a majority of economists saw the shutdown having a significant impact on first quarter gross domestic product growth, with the median expectation for a 0.3 percentage point trim.

On top of this, a late-2018 equity market sell-off, which sliced 19.8 percent of the S&P 500 between Sept. 20 and Dec. 24, also scared consumers, according to Morgan Stanley.

Source: Read Full Article

Wall Street slides on rekindled U.S.-China trade fears

(Reuters) – U.S. stocks sank over 1 percent on Thursday on fears that the United States and China would not be able to reach a trade deal with less than a month left in their fragile truce, adding to worries about a slowdown in global growth.

President Donald Trump and Chinese President Xi Jinping were unlikely to meet by an early March deadline set by the two countries for reaching a deal, two U.S. administration officials and a source familiar with the negotiations said.

That news came after White House adviser Larry Kudlow told Fox Business Network there was a “pretty sizable distance” between the countries, which are set to resume discussions in Beijing next week.

“Any concern that the stalemate won’t be overcome by China and U.S. is going to create negative sentiment for the markets just because trade is the single largest overhang,” said Mike Loewengart, vice-president of investment strategy at E*Trade Financial in New York.

Nine of the 11 major S&P sectors fell. The technology sector slid 1.58 percent, with chipmakers tumbling 2.23 percent. Chipmakers get a large chunk of their revenue from Chinese customers.

The trade-sensitive industrials sector fell 1 percent.

Wall Street was already under pressure after the European Commission, earlier in the day, slashed its euro zone growth forecasts for this year and the next due to an expected slowdown in the largest countries of the bloc, partly on trade tensions.

After Wall Street’s strong run in January — on easing trade fears, a dovish Federal Reserve and largely upbeat U.S. earnings — the market has wobbled this month as disappointing forecasts from a number of U.S. companies give investors pause, the latest being Twitter Inc.

More than half the S&P 500 companies have reported fourth-quarter results, with about 71 percent beating profit estimates, according to IBES data from Refinitiv. However, current-quarter earnings growth estimates have shrunk to 0.1 percent, from 5.3 percent at the start of the year.

“Earnings weren’t as bad as expected, but are not nearly enough to get markets back to the highs. Investors also think earnings are going to slow in the next few quarters,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.

At 1:06 p.m. ET the Dow Jones Industrial Average was down 300.04 points, or 1.18 percent, at 25,090.26, the S&P 500 was down 33.80 points, or 1.24 percent, at 2,697.81 and the Nasdaq Composite was down 103.87 points, or 1.41 percent, at 7,271.41.

Energy stocks fell 2.43 percent as crude prices sank. Only the defensive real estate and utilities sectors were higher.

Twitter tumbled 9.4 percent after forecasting that revenue in the first quarter would be weaker than expected, while full-year operating costs would rise.

SunTrust Banks Inc jumped 8.3 percent after agreeing to be bought for about $28 billion in stock by fellow regional lender BB&T Corp, which rose 2.4 percent.

The prospects of further deals sparked gains in other regional banks, although a drop in the large Wall Street lenders led to declines in the overall banks and financials indexes.

Declining issues outnumbered advancers for a 3.08-to-1 ratio on the NYSE and a 2.64-to-1 ratio on the Nasdaq.

The S&P index recorded nine new 52-week highs and two new lows, while the Nasdaq recorded 26 new highs and 26 new lows.

Source: Read Full Article

Wall Street slides on renewed U.S.-China trade fears

NEW YORK (Reuters) – Wall Street stocks sank on Thursday as worries that the United States and China would not be able to reach a trade deal increased concerns about slowing global economic growth.

U.S. President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before the March 1 deadline set by the two countries for reaching an agreement.

U.S. stocks had already been under pressure after the European Commission slashed its euro zone growth forecasts for 2019 and 2020 due to an expected slowdown in the largest countries of the bloc, partly due to trade tensions.

“There’s a resurfacing of global growth fears, which has pushed U.S. stocks down,” said Veronica Willis, investment strategy analyst at Wells Fargo Investment Institute in St. Louis. “There are still some concerns surrounding trade, and I think those issues will linger for some time.”

Stocks pared losses toward the end of the session. The benchmark S&P 500 index hit a key technical level – 2,700 – that likely prompted buying, said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.

Still, among the S&P 500’s major sectors, only the defensive utilities and real estate indexes were positive, illustrating Thursday’s risk-off sentiment.

The Philadelphia SE Semiconductor Index tumbled 2.2 percent. Chipmakers get a large chunk of their revenue from Chinese customers.

Disappointing financial forecasts from several U.S. companies, including Twitter Inc, have also given investors pause.

More than half of S&P 500 companies have reported fourth-quarter results, with about 71 percent beating profit estimates, according to IBES data from Refinitiv. However, current-quarter earnings growth estimates have shrunk to 0.1 percent from 5.3 percent at the start of the year.

“As earnings reports come in, there’s a heightened concern that future revenue growth as well as earnings over the course of 2019 won’t be as robust as investors expected,” said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

The Dow Jones Industrial Average fell 220.77 points, or 0.87 percent, to 25,169.53, the S&P 500 lost 25.56 points, or 0.94 percent, to 2,706.05 and the Nasdaq Composite dropped 86.93 points, or 1.18 percent, to 7,288.35.

Energy stocks fell 2.1 percent, the largest percentage drop among S&P 500 sectors, as crude prices sank on worries of tapering demand because of trade tensions.

Twitter shares tumbled 9.8 percent after the social media company forecast that revenue in the first quarter would be weaker than expected and that its full-year operating costs would rise.

SunTrust Banks Inc shares jumped 10.2 percent after the bank agreed to be bought for about $28 billion in stock by fellow regional lender BB&T Corp, whose shares rose 4.0 percent.

Declining issues outnumbered advancing ones on the NYSE by a 2.34-to-1 ratio; on Nasdaq, a 2.08-to-1 ratio favored decliners.

The S&P 500 posted 16 new 52-week highs and two new lows; the Nasdaq Composite recorded 32 new highs and 34 new lows.

Volume on U.S. exchanges was 7.82 billion shares, compared with the 7.49 billion-share average over the last 20 trading days.

Source: Read Full Article