By William Watts, MarketWatch , Joy Wiltermuth
Johnson & Johnson, Boeing lead Dow's triple-digit point
drop
U.S. stocks fell Friday after data showed China's economic
growth slowing further in the third quarter offset a good start to
the corporate earnings reporting season.
Bearish news on Johnson & Johnson (JNJ) and Boeing (BA) also
weighed on the Dow.
What are major indexes doing?
The Dow Jones Industrial Average fell 172 points, or 0.63%, at
26,853, while the S&P 500 index was off 6 points or 0.20% at
2,991 and the Nasdaq Composite Index slipped 52 points or 0.64% to
8,104.
Stocks ended with small gains Thursday, with the Dow up 23.9
points, or 0.1%, at 27,025.88 after flipping between positive and
negative territory. The S&P 500 gained 8.26 points, or 0.3%, to
close at 2,997.95, while the Nasdaq Composite advanced 32.67
points, or 0.4%, to finish at 8,156.85.
What's driving the market?
China reported growth of the world's second-largest economy
slowed to 6%
(http://www.marketwatch.com/story/chinas-economic-growth-continues-to-cool-off-2019-10-17)
in the third quarter from a 6.2% pace in the second quarter, and
the slowest pace since the early 1990s, as business investment
weakened.
"Friday's data shows that the decline is accelerating and that
trade-war frictions are taking their toll faster than expected,"
said Fiona Cincotta, senior market analyst at City Index, in a
note.
In U.S economic data, the Conference Board's index of leading
indicators fell for a second month
(http://www.marketwatch.com/story/leading-economic-indicators-fall-for-2nd-straight-month-point-to-slower-us-growth-2019-10-18),
suggesting the economy grew more slowly in September.
While China's weaker growth might stir expectations Beijing will
be more amenable to completing a trade deal with the U.S., it's
also likely to reinforce concerns about a slowing global
economy.
The Wall Street Journal reported
(https://www.wsj.com/articles/top-economic-advisers-warned-trump-on-tariffs-before-china-truce-11571391006)
that White House advisers warned Trump last week that continued
escalation of U.S.-China trade tensions could hit the economy and
dampen his re-election chances.
"It is the China thing, but with the start of the earnings
season, you always get the good numbers first," said Maris Ogg,
president of Tower Bridge Advisors, in an interview with
MarketWatch. "For banks, it's been a mixed-picture on loan growth,"
she said. "We are going to be on the edge of our seats" while wait
to hear what more earnings reveal about the health of the U.S.
consumer.
Around 70 S&P 500 companies have reported calendar
third-quarter earnings this week and of those companies, more than
80% have posted better-than-expected results, FactSet data
shows.
While stocks were buoyed Thursday after U.K. and European Union
leaders announced a tentative agreement on Brexit, any agreement
still faces a significant hurdle
(http://www.marketwatch.com/story/johnson-returns-to-london-to-drum-up-support-for-brexit-deal-2019-10-18)
in the U.K. Parliament with a debate and vote set for Saturday.
Read:What a Brexit deal would mean for U.S. stocks and global
investors
(http://www.marketwatch.com/story/what-a-brexit-deal-would-mean-for-us-stocks-and-global-investors-2019-10-17)
"I would venture that traders are looking to reduce exposure
ahead of the weekend," said Jim McDonald, chief investment
strategist at Northern Trust, in a interview with MarketWatch.
"We have a Brexit vote on Saturday and short-term money may not
want to be long going into the weekend," he said, adding that U.S.
stocks were near record highs thanks to a good start to the
earning's season.
Check out: Caterpillar earnings: Expect weakness on China
tensions and global economic slowdown
(http://www.marketwatch.com/story/caterpillar-earnings-expect-weakness-on-china-tensions-and-global-economic-slowdown-2019-10-18)
Federal Reserve officials also are meeting in two weeks and are
expected to cut interest rates again, while debating whether they
have done enough for now to vaccinate the economy against growing
risks of a sharper slowdown.
Federal Reserve Vice Chairman Richard Clarida on Friday said the
economy is facing "evident" risks, while inflation remains muted
(http://www.marketwatch.com/story/feds-clarida-says-economy-facing-risks-while-inflation-remains-muted-2019-10-18).
The Fed has already cut interest rates twice this year "to provide
a somewhat more accommodative policy in response to muted inflation
pressures and the risks to the outlook," he noted. Clarida's
comments represent the last public word from the Fed leadership
ahead of the Oct. 29-30 meeting.
The IMF and World Bank host annual meetings of global finance
chiefs in Washington D.C. Friday and Saturday.
Stocks to watch
Johnson & Johnson (JNJ) fell sharply after the consumer
products and drug company said it was recalling "a single lot" of
Johnson's Baby Powder after tests revealed traces of chrysotile
asbestos.
(http://www.marketwatch.com/story/johnson-johnson-stock-pummeled-after-asbestos-related-baby-powder-recall-2019-10-18)
(http://www.marketwatch.com/story/johnson-johnsons-stock-drops-after-baby-powder-recall-2019-10-18)Boeing
(BA) also weighed on the Dow after the a report that instant
messages from 2016 suggest the aircraft manufacturer misled the
Federal Aviation Administration
(http://www.marketwatch.com/story/boeing-stock-slips-further-on-report-it-misled-faa-2019-10-18)
regarding the 737 Max safety.
American Express (AXP)
(http://www.marketwatch.com/story/american-express-stock-surges-after-earnings-rise-above-forecasts-amid-higher-card-member-spending-2019-10-18)
(http://www.marketwatch.com/story/american-express-stock-surges-after-earnings-rise-above-forecasts-amid-higher-card-member-spending-2019-10-18)earned
$2.08 per share for the third quarter
(http://www.marketwatch.com/story/american-express-stock-surges-after-earnings-rise-above-forecasts-amid-higher-card-member-spending-2019-10-18),
5 cents a share above estimates and revenue also came in above
analysts' forecast.
Coca-Cola (KO) reported adjusted quarterly profit of 56 cents
per share
(http://www.marketwatch.com/story/coca-cola-adj-eps-falls-2-to-match-consensus-2019-10-18),
in line with forecasts but revenue was higher than expected.
Coca-Cola also reported organic sales growth of 5%, beating
forecasts, and also raised its full-year guidance for revenue and
operating income.
Schlumberger(SLB), the oil field services company beat forecasts
by 3 cents
(http://www.marketwatch.com/story/schlumberger-stock-rises-after-swinging-to-large-loss-but-adjusted-profit-and-revenue-beats-expectations-2019-10-18)with
adjusted quarterly profit of 43 cents per share and revenue was
above forecasts.
E*Trade Financial (ETFC), reported quarterly earnings of $1.08
per share
(http://www.marketwatch.com/story/e-trade-tops-q3-views-vows-to-take-market-share-in-zero-fee-environment-2019-10-17),
7 cents a share above estimates and revenue beat forecasts.
How are other markets performing?
The 10-year Treasury note yield was lower by 1.5 basis points at
1.744%, while the 2-year note rate was almost 3.9 basis points
lower at 1.565%. The 30-year bond yield was nearly flat at
2.241%.
Oil futures also fell Friday, after an initial rally tied to
progress toward deals on U.S.-China trade and Brexit. West Texas
Intermediate crude for November delivery ended 15 cents lower, or
0.3%, at $53.78 a barrel on the New York Mercantile Exchange.
Gold settled lower on Friday
(http://www.marketwatch.com/story/gold-edges-lower-as-equities-hold-just-below-all-time-highs-2019-10-18),
failing to get a lift from a round of weak economic data out of
China or a softer U.S. dollar, as bears look for the precious metal
to continue its retreat from more-than-six-year highs set last
month. Gold for December delivery on Comex closed down $4.20, or
0.3%, at $1,494.10 an ounce, according to FactSet data.
The ICE U.S. dollar index fell 0.3% to 97.32 Friday, pressured
by strength in sterling and the euro after news of a new Brexit
agreement this week.
(END) Dow Jones Newswires
October 18, 2019 15:05 ET (19:05 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.