By William Watts, MarketWatch , Clive McKeef
Coca-Cola shares rise after third-quarter results
U.S. stocks slipped Friday after data showed China's economic growth slowing further in the third quarter, but investors have been heartened by a positive start to the corporate earnings reporting season and stocks are still on track for weekly gains.
What are major indexes doing?
The Dow Jones Industrial Average was down 78 points, or 0.3%, at 26,945, while S&P 500 was off 6 points or 0.2% at 2,992 and the Nasdaq 100 slipped 56 points or 0.7% to 8,102.
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% growth (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.
"Though analysts had expected to see Chinese GDP growth to be weaker than in the previous quarters the overall expectation was of an increase of 6.1% with a decline to below 6% at some point next year," said Fiona Cincotta, senior market analyst at City Index, in a note. "However, Friday's data shows that the decline is accelerating and that trade-war frictions are taking their toll faster than expected."
While the 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 US-China trade tensions could hit the economy and dampen his re-election chances.
In U.S economic data, the Conference Board's index of leading indicators fell for a second mont (http://www.marketwatch.com/story/leading-economic-indicators-fall-for-2nd-straight-month-point-to-slower-us-growth-2019-10-18)h, suggesting the economy grew more slowly in September.
However, stocks were buoyed Thursday after U.K. and European Union leaders announced a tentative agreement on Brexit, but the deal 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)
Markets are also aware that Federal Reserve officials are heading into their meeting in two weeks likely to cut interest rates 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
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.
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.
Weighing on the Dow though was Johnson & Johnson (JNJ) 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-johnsons-stock-drops-after-baby-powder-recall-2019-10-18)
How are other markets performing?
The 10-year Treasury note yield was up 1.2 basis points to 1.769%, while the 2-year note rate was mostly unchanged at 1.607%. The 30-year bond yield rose 1.6 basis points to 2.257%.
Oil futures traded higher Friday, looking to score a third gain in row, with support tied to progress toward deals on U.S.-China trade and Brexit, despite a weekly fall in U.S. inventories. West Texas Intermediate crude for November delivery rose 36 cents, or 0.7%, to $54.29 a barrel on the New York Mercantile Exchange, leaving the U.S. benchmark on track for a 0.8% weekly decline. The global benchmark, as measured by December Brent crude , was up 10 cents, or 0.2%, at $60.01 a barrel, off 0.8% for the week.
Gold futures edged lower on Friday, 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 fell $3.60, or 0.2%, to $1,494.70 an ounce, paring the weekly gain for the most-active contract to about 0.4%, according to FactSet data.
The ICE U.S. dollar index fell to a two month low at 97.46 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 11:46 ET (15:46 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.