By Chris Matthews and Mark DeCambre, MarketWatch
UnitedHealth's stock weighs on the Dow
U.S. stocks edged lower Thursday morning, moving further away
from record territory as investors wade through earnings and
developments on international trade.
How are the major benchmarks performing?
The Dow Jones Industrial Average fell 55 points, or 0.2%, at
27,167, the S&P 500 index roughly 1 point to 2,983, while the
Nasdaq Composite index skidded 24 points, or 0.3%, at 8,161.
All three main benchmarks were seen declining for a third
straight session, with the S&P 500 set for its longest slump
since the four-session drop ended June 26, according to FactSet
data.
What's driving the market?
Market participants were focused on reports of a lack of
progress toward a U.S.-China trade deal. The Wall Street Journal
reported that talks have stalled on the back of negotiations
centered on intellectual property protections Huawei Technologies
Co
(https://www.wsj.com/articles/u-s-china-talks-stuck-in-rut-over-huawei-11563393280?mod=searchresults&page=1&pos=7).
U.S. Treasury Secretary Mnuchin, speaking on CNBC, on the
sidelines of the G-7 finance ministers meeting in France said that
trade talks with China are continuing apace. "Don't believe
everything you read in the press," he said. Mnuchin said that he
and top trade official Robert Lighthizer are set to engage in fresh
talks with his counterparts in China soon.
"We want to get a good deal, we will only enter a deal if it's a
good deal," he said. "We want to be able to compete fairly," the
Treasury Secretary said, but he declined to discuss the specifics
of talks.
Edward Moya, senior market analyst at Oanda said in a Thursday
research note that "the majority of early corporate profit reports
are coming in better than expected. However, he said "US
stock-index futures are being weighed down on faltering trade talks
between the US and China."
Investors are watching corporate earnings results to see whether
companies are able to pass on costs related to import tariffs and
higher wages to customers, after fully pricing in a quarter-point
cut in interest rates by the Federal Reserve later this month.
Meanwhile, Netflix Inc.'s (NFLX) downbeat subscription results
also weakened sentiment somewhat, after the streaming video giant
said Wednesday evening that it lost 126,000 subscribers in the U.S.
in the second quarter, the first such loss since 2011
(http://www.marketwatch.com/story/netflix-stock-drops-more-than-10-as-earnings-show-huge-drop-in-new-subscribers-2019-07-17).
Shares were down 11.3% Thursday morning.
Meanwhile, shares of UnitedHealth Group Inc. were dragging on
the Dow
(http://www.marketwatch.com/story/unitedhealths-stock-slump-exacts-nearly-30-point-toll-on-dow-industrials----but-ibms-rally-caps-loss-2019-07-18),
down 2.1%, despite reporting better-than-expected quarterly
profits, while raising its revenue outlook for the year. Shares in
the health care giant have risen 17.6% during the last three
months.
In economic data, a survey of manufacturers in Pennsylvania ,
New Jersey and Delaware came in much stronger than expected
(http://www.marketwatch.com/story/philadelphia-fed-manufacturing-gauge-rebounds-strongly-in-july-to-highest-level-in-a-year-2019-07-18)
at 21.8 in July, versus 0.3 in June and above expectations of 4.5,
according to a MarketWatch poll of economists. New applications for
jobless benefits rose
(http://www.marketwatch.com/story/jobless-claims-rise-8000-to-216000-in-mid-july-but-theres-no-sign-layoffs-are-rising-2019-07-18)
8,000 to 216,000 in the week ended July 13, but remain at historic
lows.
Which stocks are in focus?
Morgan Stanley(MS) shares rose 0.4%, after the bank reported
second-quarter revenue and sales in the second quarter that fell
less than analysts had expected but its results showed the steepest
slide in trading revenue among major Wall Street banks.
Shares of Alcoa Corp. (AA) added 1.2%, reversing premarket
losses after the aluminum producer reported a smaller-than-expected
second-quarter loss
(http://www.marketwatch.com/story/alcoa-posts-narrower-than-expected-q2-loss-2019-07-17)
after Wednesday's close,
(http://www.marketwatch.com/story/alcoa-posts-narrower-than-expected-q2-loss-2019-07-17)
while lowering its guidance for aluminum demand growth in 2019 due
to trade tensions and macroeconomic headwinds.
Honeywell International Inc. (HON) rose 2.4%, after the
industrial conglomerate reported second-quarter profit
(http://www.marketwatch.com/story/honeywells-stock-rises-after-earnings-beat-and-upbeat-guidance-while-sales-fell-shy-2019-07-18)
that modestly beat expectations, but revenue that fell shy.
International Business Machines Corp. (IBM) reported
second-quarter earnings
(http://www.marketwatch.com/story/ibm-stock-rises-as-earnings-cloud-revenue-beat-street-view-2019-07-17)
Wednesday evening that beat analyst estimates, boosted by growth in
its cloud business, though revenue declined for the fourth-straight
quarter. Shares rose 4% Thursday morning.
How are other markets trading?
The yield on the 10-year U.S. Treasury edged down less than a
basis point to 2.06%.
In Asia, stocks closed lower, with the China CSI 300 shedding
1%, Japan's Nikkei 225 tumbling 2% and Hong Kong's Hang Seng index
retreating 0.5%. In Europe, stocks were edging lower, with the
Stoxx Europe 600 down 0.1%.
In commodities markets, the price of oil fell 2.4% to $55.39 per
barrel, while gold edged higher to $1,424 per ounce. The U.S.
dollar , meanwhile, was flat against a basket of its peers.
(END) Dow Jones Newswires
July 18, 2019 11:32 ET (15:32 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.