Laws to vet foreign investments could shift; some corporate
results miss the mark
By Orla McCaffrey
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 20, 2018).
U.S. stocks declined Thursday as a deal to toughen
foreign-investment reviews stoked trade tensions and a round of
lukewarm corporate-earnings reports weighed on sentiment.
The proposed policy changes, announced Thursday by Senate
Majority Whip John Cornyn of Texas, would mark the first major
shift in a decade to laws used to vet foreign investment. The deal
strengthens the Committee on Foreign Investment in the U.S. and the
export control system, ostensibly to hinder foreign investment from
countries such as China that could threaten national security.
"Policies like this have such a long arc that you can't possibly
think of all the repercussions instantly," said Michael Antonelli,
equity sales trader at Robert W. Baird & Co. "Investors will
look at it over next few months to see what the bill means."
The Dow Jones Industrial Average fell 134.79 points, or 0.5%, to
25064.50. The S&P 500 shed 11.13 points, or 0.4%, to 2804.49,
and the technology-heavy Nasdaq Composite dropped 29.15 points, or
0.4%, to 7825.30.
The S&P 500's financial sector was the weakest of the 11
sectors in the broad index, falling 1.4%. Shares of big U.S. banks
had risen over much of the past week after the firms posted results
that generally beat market expectations. But reports from American
Express, Bank of New York Mellon and Travelers weren't received as
favorably.
American Express fell $2.81, or 2.7%, to $100.17, despite
reporting strong card-member spending and loan growth. Bank of New
York slumped 2.91, or 5.2%, to 52.73, after posting
weaker-than-expected revenue, and Travelers fell 4.82, or 3.7%, to
125.18 as weather-related catastrophes dented its bottom line.
Shares of Wells Fargo, meanwhile, fell 24 cents, or 0.4%, to
56.33 after The Wall Street Journal reported the bank is in the
process of refunding tens of millions of dollars in charges added
to customers' accounts without their full understanding.
"Financials had a big move yesterday, and everyone piled into
the sector, " said Mike O'Rourke, chief market strategist at
JonesTrading Institutional Services. Thursday's moves "are a
reaction to earnings," he said, and aren't indicative of a
fundamental weakness in financial stocks.
Major indexes briefly pared their losses after President Donald
Trump questioned the Federal Reserve's interest-rate increases in
an interview with CNBC, saying he hoped the central bank would stop
raising rates.
The WSJ Dollar Index, which measures the currency against a
basket of 16 others, pared its gains on the comments and ended up
0.2%. Yields on 10-year U.S. Treasurys settled at 2.845%, down from
2.875% Wednesday. Yields fall as prices rise.
The moves also came a day after President Trump reiterated his
tariff threats against European autos. Mr. Trump said a failure to
negotiate "something fair" with European and North American allies
could lead to "tremendous retribution."
"Generally people are going to look at [trade tensions] through
a negative lens," said Jeremy Bryan, a portfolio manager at
Gradient Investments. "That's one of the things that can stifle
global growth -- if we have protectionism."
The issue of tariffs is expected to be high on the agenda next
week when European Commission President Jean-Claude Juncker visits
the White House.
The U.S. imported more than $350 billion in cars, trucks and
auto components in 2017, according to Commerce Department data.
With the Trump administration threatening tariffs of between 20%
and 25%, the new measures, if enacted, would be the
administration's largest to date. The European Union has compiled a
list of U.S. imports, including pharmaceuticals and other chemical
products, it would target for tariffs if next week's visit to
Washington fails to dissuade the U.S. administration.
Shares of U.S. auto companies edged lower, with General Motors
down 56 cents, or 1.2%, to 39.41 and Ford Motor off 5 cents, or
0.5%, to 10.82.
Broader earnings reports were mixed, with shares of eBay off
3.84, or 10%, to 34.11 after the company late Wednesday offered
disappointing earnings guidance. Danaher, meanwhile, added 4.42, or
4.5%, to 103.20 after the medical-equipment company reported strong
earnings.
In other corporate news, Comcast withdrew its offer for 21st
Century Fox, ending a bidding war with Walt Disney. Shares of
Comcast rose 87 cents, or 2.6%, to 34.91, while Disney gained 1.44,
or 1.3%, to 112.13.
(END) Dow Jones Newswires
July 20, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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