U.S. stocks slipped back from record highs on Wednesday on disappointing earnings results and doubts about a U.S. – China trade deal
How are the major benchmarks doing?
The Dow Jones Industrial Average DJIA, -0.41% was down 52 points, or 0.2%, at 27,986 while the S&P 500 index SPX, -0.15% was off 2 points at 3,121, but the Nasdaq Composite COMP, +0.00% was up 12 points, or 0.1, at 8,562.
On Monday, the Dow DJIA, -0.41% closed 31.33 points, 0.1%, higher at 28,036.22, while the S&P 500 index SPX, -0.15% edged up 1.57 points to 3,122.03, a gain of 0.05%. The Nasdaq Composite Index COMP, +0.00% added 9.11 points, or about 0.1%, to end at 8,549.94.
The Dow marked its 12th record close of 2019, the S&P 500 notched its 23rd of the year, while the Nasdaq Composite registered its 17th all-time high in 2019. All three benchmarks booked back-to-back gains on Monday.
Read: With Dow, S&P 500 at records, investors ignore ‘material deterioration’ in global economy
What’s driving the market?
Doubts about substantive progress on a partial trade deal with China ahead of a Dec. 15 deadline for the increase of import tariffs began to undermine bullish sentiment again Tuesday with U.S. economic growth slowing.
The economy is clearly facing several challenges, primarily from overseas, but the three rate cuts since July should help sustain growth, New York Fed President John Williams said on Tuesday. The U.S. economy is facing headwinds from slower global growth, uncertainty from trade and muted inflation pressures, Williams said. As a result of these global factors, “growth is starting to slow in the U.S.,” Williams warned.
Wall Street also was digesting a mixed earnings picture, which featured disappointing sales figures from Dow component Home Depot HD, -4.97%.
Home Depot lowered its fiscal year sales guidance as it reported a 3% decline in its fiscal third quarter earnings to Nov. 3 earnings of $2.77 billion, or $2.53 a share. The company said its sales were below expectations because of investments in upgrading stores and its digital platform.
However, in U.S. economic data, U.S. home building rose in October and permits for future home construction jumped to a 12-year high. Housing starts increased 3.8% to a seasonally adjusted annual rate of 1.314 million units last month. Housing starts rose 8.5% on a year-on-year basis in October. Building permits surged 5.0% to a rate of 1.461 million units in October, the highest level since May 2007. The housing market has picked up in recent months after the Federal Reserve lowered interest rates, pushing down mortgage rates.
Which stocks are in focus?
Home Depot HD, -4.97% shares were down 4% after beat fiscal third-quarter profit expectations but missed on total and same-store sales, and lowered its full-year outlook. Shares of rival home-improvement company Lowe’s Cos. LOW, -1.22%, fell also ahead of its results on Wednesday.
Kohl’s Corp.’s KSS, -17.21% stock dropped 15 after the retailer cut its full-year guidance.
Boeing BA, +0.31% shares rose after receiving 50 orders for its grounded 737 MAX, a boost for the embattled plane maker as it continues to deal with the fallout from two fatal crashes involving the jet.
Shares of Medtronic PLC MDT, +0.98% surged after the medical technology company reported fiscal second-quarter earnings that rose above expectations, and raised its full-year profit outlook, but the stock slipped 1.1% in premarket trading to extend a pullback from the previous session’s all-time intraday high.
How are other markets trading?
U.S. Treasury yields struggled for direction on Monday as investors kept a close watch on progress towards a phase one trade agreement between Washington and Beijing, which has kept bond traders on tenterhooks. The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.80% was little changed around 1.80. from 1.808%.
The price of gold for December delivery GCZ19, +0.09% headed $3.40, or 0.2%, lower at $1,468.60 an ounce on Comex early Tuesday as stocks edged higher.
Oil futures were lower again on Tuesday amid reports that major oil exporter Russia wasn’t likely to advocate for deeper cuts at a December OPEC meeting. West Texas Intermediate crude for December delivery CLZ21, -1.43% was down 73 cents, or 1.3%, at $56.41 a barrel on the New York Mercantile Exchange, after a 1.2% slide on Monday.
The ICE U.S. Dollar Index DXY, +0.02%, representing a basket of its trading rivals, was little changed at 97.000.
In Europe, stocks ended mixed; the Stoxx Europe 600 SXXP, -0.27% rose 0.6%.
In Asia overnight Tuesday, stocks traded mixed, with the China CSI 300 000300, +1.00% gaining 1%, Japan’s Nikkei 225 NIK, -0.53% fell 0.5% and Hong Kong’s Hang Seng HSI, +1.55% climbed 1.6%, to add to its sharp gain from the previous session.
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