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Wall Street slides on weak earnings, hawkish Fed, Saudi concerns

Stock MarketsOct 18, 2018 01:26PM ET
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2/2 © Reuters. FILE PHOTO: Traders work on the floor of the NYSE in New York 2/2

By Medha Singh

(Reuters) - U.S. stocks sank more than 1 percent on Thursday as weak industrial earnings raised worries about rising expenses and the impact of tariffs, adding to concerns over higher borrowing costs after hawkish commentary in the Federal Reserve's minutes.

The markets hit session lows after U.S. Treasury Secretary Steven Mnuchin pulled out of a conference in Saudi Arabia, as the Trump administration awaited the outcome of investigations into missing Saudi journalist Jamal Khashoggi. [nL2N1WY0Z8]

Defense contractors such as Lockheed Martin (NYSE:LMT) and Raytheon fell on concerns that U.S. lawmakers will block further arms deals with Saudi Arabia, which is also heavily invested in some U.S. corporations.

"There are concerns around Saudi's funds being in jeopardy," said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:SCHW) in Austin, Texas. "Until there is no clear resolution to the Saudi issue, investors are bound to take some profits."

Stocks were already under pressure earlier as weak earnings reports from companies such as Cessna business jet maker Textron (NYSE:TXT) and equipment rental company United Rentals did little to soothe worries about the impact of tariffs, rising borrowing costs and wages on corporate profits.

Textron fell 9.4 percent and United Rentals sank 10.8 percent, while Sealed Air (NYSE:SEE) slid 9.2 percent after the packaging company cut its full-year profit outlook due to higher raw material and freight costs.

Profits at S&P 500 companies are expected to have risen 22 percent in the third quarter, slower than the previous two quarters, according to I/B/E/S Refinitiv. Of the 69 firms that have reported so far, 78.3 percent have beaten expectations.

"The market is a little bit on edge as they digest earnings, rising rates and minutes from the Fed meeting. There is some spill over in volatility from last week," said Paul Brigandi, managing director and head of trading at Direxion in New York.

At 13:02 a.m. EDT the Dow Jones Industrial Average was down 280.57 points, or 1.09 percent, at 25,426.11, the S&P 500 was down 31.60 points, or 1.12 percent, at 2,777.61 and the Nasdaq Composite was down 127.39 points, or 1.67 percent, at 7,515.32.

The S&P communication services and tech sectors fell nearly 2 percent, while industrials dropped 1.61 percent.

Only the defensive utilities, consumer staples and real estate gained among the 11 major S&P sectors.

Among the few bright spots was Philip Morris (NYSE:PM), which rose 3.6 percent after the Marlboro cigarette maker topped analysts' estimates for quarterly profit and sales.

Declining issues outnumbered advancers for a 2.75-to-1 ratio on the NYSE and a 2.94-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and 25 new lows, while the Nasdaq recorded 12 new highs and 76 new lows.

Wall Street slides on weak earnings, hawkish Fed, Saudi concerns
 

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Carl Phillip Tan
Carl Phillip Tan Oct 18, 2018 2:39PM ET
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having big investors lose their profits makes a huge impact on USD credibility in the long run as it usually attracts pressure on either side currently lead by this ongoing matter.
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Carl Phillip Tan
Carl Phillip Tan Oct 18, 2018 2:34PM ET
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that missing person may had been done coordinatedly after a long period of strategic organization leading to this moment wherein a sudden volatile situation may occur at any given moment that would then create a chain reaction to other currencies forcing investors from other countries not involved to take an earlier action of pulling out their investments out of the US inorder to find safer currencies to secure their investments and still gain the upper hand. US political officials might be hiding something related to the missing journalist which in my opinion has vital information that may lead to bearish consequences in USD value. In this case, US made the first move from the word "covert".
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Anthony Anthony
Anthony Anthony Oct 18, 2018 2:18PM ET
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why a missing rat in saudi arabia cause concerns?
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Omid Navid
Omid Navid Oct 18, 2018 2:08PM ET
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What concerns me is to see what s the reaction in Saudi Arabia's terms
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Nathan Dunn
Nathan Dunn Oct 18, 2018 2:00PM ET
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We can always count on Bi Ba's lamentations over buybacks
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Serenity Ruby Cutamora
Serenity Ruby Cutamora Oct 18, 2018 1:42PM ET
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is truelly...?
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Peter Dee
Peter Dee Oct 18, 2018 11:54AM ET
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Only G.O.D. Knows Everything!!
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