MARKET SNAPSHOT: Stocks Waver As Earnings Reports Offer Conflicting Narratives

Date : 04/17/2019 @ 3:22PM
Source : Dow Jones News
Stock : Qualcomm Incorporated (QCOM)
Quote : 85.525  -1.305 (-1.50%) @ 6:36PM

MARKET SNAPSHOT: Stocks Waver As Earnings Reports Offer Conflicting Narratives

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By Chris Matthews and William Watts, MarketWatch

IBM earnings miss weighs on the Dow

U.S. stocks traded mixed in early morning trade Wednesday, as investors continued to process new earnings releases, while offering a muted reaction to data that showed China's economic growth stabilized.

What are major indexes doing?

The Dow Jones Industrial Average fell 50 points, or 0.2%, to 26,400, while the S&P 500 index fell 4 points, or 0.2%, to 2,902. The Nasdaq Composite index was off 15 points at 7,986, a decline of 0.2%.

All three benchmarks were retreating into negative territory after modest opening gains.

See:U.S. stock-market euphoria may be nearing a dangerous level, says RBC strategist (http://www.marketwatch.com/story/us-stock-market-euphoria-may-be-nearing-a-dangerous-level-says-rbc-strategist-2019-04-17)

The S&P 500 ended just 0.8% away from its all-time closing high of 2,930.75 set on Sept. 20, while the Dow and Nasdaq each stand around 1.4% away from their record closes set last year.

Also read:Stock market at ' risk of a melt-up, not a meltdown,' warns BlackRock's Larry Fink (http://www.marketwatch.com/story/blackrocks-fink-says-stock-market-at-risk-of-a-melt-up-not-a-meltdown-2019-04-16)

What's driving the market?

Investors continue to wade through corporate results as first-quarter earnings season moves into full swing, with an earnings miss from International Business Machines Inc. (IBM) caused the stock to fall 4.5% Wednesday, weighing heavily on the Dow.

Chinese government data showed the country's economy grew at a 6.4% rate, year-over-year (http://www.marketwatch.com/story/chinas-economy-grew-64-in-q1-beating-expectations-2019-04-16) in the first quarter of 2019, maintaining the pace seen in the last quarter of 2018 as factory output picked up steam. The figure was slightly higher than many economists expected.

The data failed to provide much spark to European markets, but analysts said signs of stability could soothe investor worries about the world's second-largest economy. Stock-market gains since the end of last year have been tied in part to expectations stimulus efforts by Chinese authorities and a potential deal to end the U.S.-China trade battle would limit the scope of the country's slowdown and alleviate fears of a global economic crunch.

What stocks are in focus?

Shares of Netflix Inc. (NFLX) rose 2.1% Wednesday morning, after the company reported a record number of paying subscribers in the first quarter. After the company released results Tuesday evening, the stock turned lower on pessimism toward second-quarter guidance, but reversed those losses after analysts began to combat that narrative (http://www.marketwatch.com/story/netflix-stock-climbs-premarket-as-analysts-take-a-bullish-tone-on-earnings-2019-04-17).

Read:Netflix is burning money and lacks a good business model, this tech investor says (http://www.marketwatch.com/story/netflix-is-burning-money-and-lacks-a-good-business-model-this-tech-investor-says-2019-04-16)

Shares of Qualcomm Inc.(QCOM) were up more than 15%, after soaring more than 20% on Tuesday (http://www.marketwatch.com/story/qualcomm-stock-surges-as-apple-agrees-to-settlement-2019-04-16) after the chip maker and Apple Inc.(AAPL) settled patent litigation against each other.

Opinion:Qualcomm gets big windfall in surprise settlement, but Apple may have saved the iPhone from 5G doom (http://www.marketwatch.com/story/qualcomm-gets-big-windfall-in-surprise-settlement-but-apple-may-have-saved-the-iphone-from-5g-doom-2019-04-16)

Following the settlement, chip maker Intel Corp.(INTC) said it would get out of the business for 5G modem chips (http://www.marketwatch.com/story/intel-drops-out-of-5g-modem-business-after-apple-qualcomm-settlement-2019-04-16) in which it was trying to compete with Qualcomm. Intel shares were up 2.8% Wednesday morning.

Shares of PepsiCo Inc.(PEP) were up 2%, after the beverage and snack giant Wednesday morning reported first-quarter profit and revenue that topped Wall Street expectations (http://www.marketwatch.com/story/pepsicos-stock-surges-toward-record-high-after-profit-revenue-rise-above-expectations-2019-04-17).

Shares of Bank of New York Mellon Corp. (BK) fell 7.6%, after the financial services company reported sharper declines (http://www.marketwatch.com/story/bank-of-new-york-mellon-earnings-fall-short-2019-04-17) in first-quarter sales and profits than Wall Street had expected.

Morgan Stanley(MS) stock rose 1.1% Wednesday morning, after the company reported first-quarter profit (http://www.marketwatch.com/story/morgan-stanleys-stock-jumps-toward-7-month-high-after-profit-and-revenue-fall-less-than-expected-2019-04-17) and revenue that fell less than expected.

Shares of United Continental Holdings Inc. (UAL) rose 4.9%, following the airliner's release of earnings figures Tuesday evening that beat analyst forecasts (http://www.marketwatch.com/story/united-shares-rise-on-better-than-expected-fourth-quarter-earnings-2019-04-16).

What are the analysts saying?

"It's still much too small a sample size to generate conclusions, but the bottom line is that earnings season is not off to a very good start," wrote Tom Essaye, president of the Sevens Report in a Wednesday morning research note. "While stocks are looking past that courtesy of dovish Fed speak and hopes of better global growth, earnings will need to get better during the next two weeks--because so far the results, while not a disaster, aren't that great."

What's on the economic calendar?

The U.S. trade deficit fell 3.4% in February to the lowest level in eight months (http://www.marketwatch.com/story/us-trade-deficit-shrinks-again-in-february-to-lowest-level-in-eight-months-2019-04-17), the Commerce Department said Wednesday. At 10 a.m. Meanwhile, wholesale inventories (http://www.marketwatch.com/story/us-wholesale-inventories-climb-02-in-february-2019-04-17) in the U.S. rose a mild 0.2% in February, the government said Wednesday. Sales increased 0.3% in the month. The ratio of inventories to sales was flat at 1.35.

Philadelphia Fed President Patrick Harker will give a speech on the economic outlook at 12:30 p.m., while St. Louis Fed President James Bullard will give a speech at the Hyman Minksy Conference in New York at 12:45 p.m. Bullard is a voter on the Fed's interest-rate committee this year, while Harker is not.

At 2 p.m., the Federal Reserve will issue its Beige book, a collection of anecdotal reports from the central bank's business districts, reflecting a snapshot of U.S. economic conditions.

How are other markets trading?

Stocks in Asia closed mostly higher on Wednesday (http://www.marketwatch.com/story/asian-markets-mixed-in-lackluster-trading-2019-04-15), with China's Shanghai Composite Index and Japan's Nikkei 225 both rising 0.3%. Hong Kong's Hang Seng Index, meanwhile, ended the day flat.

In Europe, stocks were edging higher (http://www.marketwatch.com/story/china-growth-sees-mixed-reaction-in-europe-markets-2019-04-17), as the Stoxx Europe 600 was rose 0.2%, while Germany's DAX and France's CAC 40 were also up on the day.

In commodities markets, the price of crude oil was on the rise (http://www.marketwatch.com/story/oil-snaps-back-as-preliminary-data-show-a-dip-in-us-supply-china-growth-surprises-2019-04-17), as was gold (http://www.marketwatch.com/story/gold-claws-up-from-lowest-point-of-the-year-but-move-limited-by-continued-stock-strength-2019-04-17). The U.S. dollar , meanwhile, edged lower Wednesday (http://www.marketwatch.com/story/us-dollar-edges-lower-after-stronger-than-expected-china-gdp-data-2019-04-17).

 

(END) Dow Jones Newswires

April 17, 2019 10:07 ET (14:07 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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