By Andrea Riquier and Clive McKeef
Bank of America tops earnings expectations
Stocks slipped Wednesday after U.S. retail sales fell for the
first time in seven months in September, offsetting a good star to
the third quarter corporate earnings reporting season.
A Chinese protest against a bill passed by the U.S. House of
Representatives in support of Hong Kong also cast doubt on
prospects for the future of the trade deal between the two
countries announced last Friday.
What are major indexes doing?
The Dow Jones Industrial Average was down 14 points or 0.05%
around 27,011 in early afternoon trade, while the S&P 500 was
down 7 points, 0.2% lower, at 2,988 and the Nasdaq was down 32
points, or 0.4%, at 8,116.
On Tuesday, the Dow rose 237.44 points, or 0.9%, to end at
27,024.80, while the S&P 500 advanced 29.53 points, or 1%, to
close at 2,995.68, leaving it 1% away from its all-time closing
high of 3,025.86 set on July 26. The Nasdaq Composite finished at
8,148.71 after gaining 100.06 points, or 1.2%.
What's driving the market?
U.S. retail sales fell in September
(http://www.marketwatch.com/story/us-retail-sales-snap-6-month-winning-streak-in-september-as-receipts-fall-03-2019-10-16)
for the first time in seven months raising concerns that the
slowdown in business spending evident in the manufacturing sector,
resulting from President Trump's international trade policies, may
be spilling over into consumer spending.
"Consumption is poised to cool along with slower job gains
ahead, and the Fed will be looking closely for any signs of trade
uncertainty contaminating the most important segment of the U.S.
economy," said economist Katherine Judge of CIBC Capital
Markets.
The probability of an October interest rate cut
(http://www.marketwatch.com/story/probability-of-an-october-fed-rate-cut-soars-after-disappointing-retail-sales-data-2019-10-16)
by the Federal Reserve rose to 90% on Wednesday after the retail
sales data was published, up from
(http://www.marketwatch.com/story/probability-of-an-october-fed-rate-cut-soars-after-disappointing-retail-sales-data-2019-10-16)78%
on Tuesday.
The IMF warned
(http://www.marketwatch.com/story/us-stock-market-is-overvalued-imf-says-2019-10-16)
on Wednesday that the U.S. stock market was overvalued as belief in
a Federal Reserve rescue for the economy is allowing investors to
ignore tensions over international trade policy.
Earlier, China threatened to retaliate
(http://www.marketwatch.com/story/china-vows-strong-countermeasures-in-wake-of-us-bill-supporting-hong-kong-protesters-2019-10-16)
over a series of bills backing pro-democracy protesters
(http://www.marketwatch.com/story/house-backs-3-bills-to-support-pro-democracy-protesters-in-hong-kong-2019-10-15)in
Hong Kong that unanimously passed the House of Representatives late
Tuesday.
"We think it's possible this bill will push China into a public
show of defiance against U.S. 'interference,'" which could mean a
crackdown on Hong Kong protesters, said Jasper Lawler, head of
research at London Capital Group, in a note. "Under that scenario,
markets would be relieved if China's retaliation kept the trade
pact intact. However, higher political uncertainty in Hong Kong
would be a sizable downside risk," Lawler said.
See:China vows 'strong countermeasures' in wake of U.S. bill
supporting Hong Kong protesters
(http://www.marketwatch.com/story/china-vows-strong-countermeasures-in-wake-of-us-bill-supporting-hong-kong-protesters-2019-10-16)
(http://www.marketwatch.com/tools/calendars/economic)The Wall
Street Journal also reported
(https://www.wsj.com/articles/doubts-persist-over-chinas-commitment-to-u-s-farm-purchases-11571218201)
there are questions about the amount of U.S. agricultural products
China will actually buy as part of the tentative trade deal
announced last week. At a meeting with Italian President Sergio
Mattarella at the White House on Wednesday, President Donald Trump
said he would likely not sign any trade deal until
mid-November.
Meanwhile, the third quarter U.S. corporate earnings reporting
season got off to a good start this week. Of the S&P 500 index
companies that have reported through Wednesday morning, 83% have
topped analyst expectations, FactSet data shows.
Which stocks are in focus?
Shares of Bank of America Corp.(BAC) were higher after the
company reported third-quarter profit that topped Wall Street
expectations.
Shares of United Airlines Holdings Inc.(UAL) were higher after
third-quarter profit reported after Tuesday's close topped
expectations and the company raised guidance for the year
(http://www.marketwatch.com/story/united-airlines-stock-higher-after-company-raises-guidance-tops-profit-views-2019-10-15).
Shares of General Motors (GM) rose more than 2% Wednesday after
news that the car maker and the United Auto Workers union had
reached a tentative deal to end the months long strike
(http://www.marketwatch.com/story/gm-uaw-reach-tentative-deal-after-monthslong-strike-2019-10-16)
at GM.
Shares of MGM Resorts International(MGM) fell after it announced
late Tuesday that it would
(http://www.marketwatch.com/story/mgm-selling-circus-circus-huge-stake-in-bellagio-2019-10-15)sell
its Circus Circus casino resort in Las Vegas and a huge interest in
its Bellagio resort.
After the closing bell, results are expected from
streaming-video company Netflix Inc.(NFLX), computing giant
International Business Machines Corp.(IBM), metals maker Alcoa
Corp.(AA) and railroad CSX Corp.(CSX).
How are other markets trading?
In commodities, crude oil prices were 71 cents, 1.3%, higher,
trading at $53.52 a barrel on the New York Mercantile Exchange.
Gold futures rose $7.00, or 0.5%, to $1,490.40. The dollar was
0.25% lower than a basket of other currencies. The U.S. 10-year
Treasury note was two basis points lower to 1.75.
(END) Dow Jones Newswires
October 16, 2019 13:57 ET (17:57 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.