U.S. stocks finish lower as S&P 500, Dow turn negative for 2018
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U.S. stocks closed lower Friday with the S&P 500 and the Dow Jones Industrial Average turning red for the year as doubts about whether equities can count on support from corporate earnings emerged in the wake of disappointing results from a handful of megacap companies.
How did major benchmarks fare?
After falling more than 500 points earlier, the Dow Jones Industrial AverageDJIA, -1.19% trimmed losses to drop 296.24 points, or 1.2%, to 24,688.31. The S&P 500 SPX, -1.73% fell 46.88 points, or 1.7%, to 2,658.69. The Nasdaq Composite Index NQZ8, -0.84% retreated 151.12 points, or 2.1%, to 7,167.21.
For the week, the Dow is off 3%, the S&P 500 3.9% and the Nasdaq is down 3.8% while for the month of October so far, the S&P has lost 8.8%, the Dow is down 6.7%, and the Nasdaq has shed 11%. Friday’s downdraft also pulled the S&P 500 and the blue-chip index into the red for 2018. The Nasdaq is still up 3.8% year-to-date although the tech-heavy benchmark entered correction territory on Wednesday, when it closed more than 10% below its recent highs.
What drove the market?
Investors were wary ahead of the weekend amid persistent worries about slowing global growth, rising interest rates and concerns that companies have seen peak earnings growth.
Not helping the mood was disappointing results from big corporations. Amazon.com Inc. AMZN, -7.82% posted a record profit but sales disappointed, and more important, its forecast for fourth-quarter sales — the all-important holiday shopping period — was below analysts’ expectations.
Trade worries were also simmering after U.S. officials reportedly said talks with China won’t resume until Beijing comes up with solid proposals over forced technology transfers and other economic issues.
Which data were in focus?
The Commerce Department reported that the U.S. economy grew 3.5% in the third quarter, beating forecaster estimates of 3.4%. Second-quarter growth held at 4.2%.
The University of Michigan’s consumer sentiment index came in at 98.6, below the consensus estimate of 99.
What were analysts saying?
Alec Young, managing director of global markets research at FTSE Russell, said that the declines were sparked by disappointing quarterly reports from Amazon and Alphabet Inc., but the bigger concern is where the global economy is headed in 2019. “All the macro issues, from higher interest rates to slowing growth in China are giving us a half-glass-empty situation regarding 2019 earnings,” he told MarketWatch.
The speed and magnitude of the declines, he argued, is also a concern. “This is a dangerous time, a fluid time, and the market looks like a falling knife, and so were looking at a buyer’s strike,” he said, in which investors retreat for the sidelines and wait for the market to bottom out.
“The market’s mood swings have been unsettling, but the underlying conditions that triggered the rout are unlikely to shatter the economic or earnings cycles. We think this will all sort out, but it will take some time,” said Kelly Bogdanova, vice president of portfolio advisory group at RBC Wealth Management, in a note.
Which stocks are in focus?
Amazon.com AMZN, -7.82% shares are down 7.8% after the retailer lowered its guidance for holiday sales figures.
Alphabet Inc. GOOGL, -1.80% shares slid 1.8% after the search-engine giant beat on earnings but fell short on revenue target.
Intel Corp. INTC, +3.11% shares rose 3.1% after the company’s quarterly results and outlook beat analyst estimates.
Share of Expedia Group Inc. EXPE, +2.49% gained 2.5% following the release of quarterly results that surpassed Wall Street expectations.
Charter Communications Inc. CHTR, -6.29% shed 6.3% following the release of revenue numbers the fell short of analysts’ estimates.
How were other markets trading?
Asian stocks fell, led by a 1% drop for the Hong Kong Hang Seng IndexHSI, -1.11% and a 0.8% fall for the Nikkei 225 index NIK, -0.40% European markets struggled as well.
The yen USDJPY, -0.48% and gold prices GCZ8, +0.24% were higher, indicative of investors seeking out perceived safer havens and oil prices CLZ8, +0.43% were stronger.
—Barbara Kollmeyer contributed to this report
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https://www.marketwatch.com/story/us-stock-futures-under-pressure-after-amazon-google-disappoint-2018-10-26