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S&P 500 dips as economic data, trade worries offset upbeat earnings

Stock MarketsOct 16, 2019 02:44PM ET
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By Stephen Culp

NEW YORK (Reuters) - The benchmark S&P 500 stock index edged lower on Wednesday as weak U.S. economic data and simmering geopolitical tensions spooked buyers away from the equities market, despite a string of generally positive third-quarter corporate earnings reports.

Technology shares, led by Microsoft Inc (O:MSFT), weighed on all three major U.S. stock averages, pulling the S&P 500 and the Nasdaq into the red. The Dow was nominally higher.

U.S. retail sales contracted in September for the first time in seven months, according to the Commerce Department, in a sign that cracks might be spreading from the manufacturing sector to the broader economy.

"The retail sales number has surprised people," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "It's bringing up ideas that the economy might be slowing down."

Uncertainty over whether the United States and China could resolve their long-running trade dispute increased after the U.S. House of Representatives riled Beijing by passing pro-democracy legislation in support of Hong Kong.

President Donald Trump said he would probably not sign any trade deal before he meets with Chinese President Xi Jinping at the upcoming APEC Forum in Chile, but said a partial trade deal was being formalized.

"Part of today's market action concerns whether the tentative (trade) agreement reached last Friday will move forward or not," Tuz said. "We've got two months before significant tariffs go into effect."

"Things haven't worked out the way they usually do when earnings season begins and you focus less on the global macro issues that drive the market so much these days."

Analysts currently expect S&P 500 third-quarter earnings to have fall by 3%, which would mark the first year-on-year contraction since the earnings recession that ended in 2016.

However, of the 43 S&P 500 companies to have posted third-quarter results so far, 86% have come in better than consensus expectations.

Bank of America (N:BAC) rose 2.2% after posting its third-quarter profit beat due to growth in advisory fees and loan book expansion.

United Airlines (O:UAL) advanced 2.6% after the airline beat quarterly profit estimates and increased its 2019 guidance.

The Dow Jones Industrial Average (DJI) rose 18.19 points, or 0.07%, to 27,042.99, the S&P 500 (SPX) lost 3.71 points, or 0.12%, to 2,991.97 and the Nasdaq Composite (IXIC) dropped 25.20 points, or 0.31%, to 8,123.51.

Of the 11 major sectors in the S&P 500, three were trading in negative territory, with energy (SPNY) and tech (SPLRCT) suffering the largest percentage losses.

In other stocks news, Eli Lilly & Co (N:LLY) dropped 1.5% in the wake of a late-stage study which showed its experimental pancreatic cancer treatment failed to meet the overall survival goal.

Drug distributors McKesson (N:MCK), AmerisourceBergen (N:ABC) and Cardinal Health (N:CAH) rose between 3% and 6% following a report that they were in talks with state and local governments to settle thousands of opioid lawsuits for $18 billion.

General Motors (N:GM) rose 1.5% after the automaker reached a tentative labor deal with the United Auto Workers union.

Netflix Inc (O:NFLX) shares were up 0.3% in advance of its earnings report, expected after the bell.

Declining issues outnumbered advancing ones on the NYSE by a 1.11-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored decliners.

The S&P 500 posted 12 new 52-week highs and no new lows; the Nasdaq Composite recorded 31 new highs and 54 new lows.

S&P 500 dips as economic data, trade worries offset upbeat earnings
 

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Comments (8)
WalterWhites Money
WalterWhites Money Oct 16, 2019 3:44PM ET
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Upbeat earnings??? Didnt everyone lower guidance, so saving face not beating
Nghi Tran
Nghi Tran Oct 16, 2019 1:40PM ET
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it is ok, market will run its *******out on Monday again. news basically come to throw fears and mislead people.
Strela Fxxx
Strela Fxxx Oct 16, 2019 12:11PM ET
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With the increase of the euro, Europe will go into deflation ..........
Peter Dikeakos
Peter Dikeakos Oct 16, 2019 11:58AM ET
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Alarming number of shootings inside U S A. No HEADLINE Here.
Ian Serra
That_Guy Oct 16, 2019 11:58AM ET
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how does shootings have anything to do with investing
Peter Dikeakos
Peter Dikeakos Oct 16, 2019 11:58AM ET
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It is called Rebellion At The Bottom. The title had the term Hong Kong.
Dee Mehta
DMFINANCE Oct 16, 2019 10:02AM ET
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Really bad retail numbers too dont muck teh hesdlines
Andrew carson
Andrew carson Oct 16, 2019 9:39AM ET
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Buying had changed since yesterday so....
Steven Chen
Gamer_LG Oct 16, 2019 8:39AM ET
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banks tend to do well regardless how economic outlook is, it is only weak during the short span of time where there is a financial crisis and before the fed steps in.
Dee Mehta
DMFINANCE Oct 16, 2019 8:39AM ET
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The fed has already stepped in
Junk Man
Junk_Man Oct 16, 2019 8:30AM ET
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Let's just assume there is no deal between US and China and any agreement will take many years...(tariffs go into play in Dec) Factor that in and how do we then see the markets.
Sam Dorf
Sam Dorf Oct 16, 2019 8:30AM ET
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Foolish to assume when tarrifs go into effect as they can continued to be delayed And the merry go round can keep spinning
Me comment
Me comment Oct 16, 2019 8:30AM ET
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Volitility will be in play untilbthe tariffs go away. The market would jump 5-10% with no tariffs, but the Trump ego won't let that happen.
 
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