By William Watts, MarketWatch , Chris Matthews
U.S. stocks fell modestly Monday as global growth concerns
dogged investors, offsetting a strong rally in Chinese equity
markets, and as investors looked ahead to this week's deluge of
third-quarter earnings reports.
What are major indexes doing?
The Dow Jones Industrial Average fell 67 points, or 0.3%, to
25,371, while S&P 500 was down 9 points, or 0.3% to 2758. The
Nasdaq Composite Index was down 6 points to 7441.
What's driving markets?
Stocks are trying to find direction after bulls and bears fought
each other to a stalemate last week, leaving the benchmark S&P
500 to eke out a weekly rise of less than 0.1%. The tech-heavy
Nasdaq Composite suffered a 0.6% fall for its third straight weekly
decline as once-popular technology shares continued to take a
beating, while the Dow Jones Industrial Average broke a three-week
losing streak with a 0.4% rise.
Increased volatility has left investors nervous in what's been a
rough October. The S&P 500 is down 5% in the month-to-date,
while the Dow is off 3.8% and the Nasdaq has shed 7.4%. That's left
the S&P 500 5.9% off its record high set in late September,
while the Dow is down 5.6% from its early October peak.
Chinese stocks surged for a second day Monday on reassuring
comments by leaders and regulators
(http://www.marketwatch.com/story/big-stock-rally-in-china-bolsters-markets-across-asia-2018-10-21)in
the wake of last week's market rout and disappointing economic
data. The Shanghai closed 4.1% higher, while the smaller Shenzhen
Composite soared more than 5%.
Over the weekend, China President Xi Jinping emphasized China's
support for the private sector, according to the Xinhua News
Agency, following concerted moves Friday by Vice Premier Liu He,
Xi's top economic official, and the head of the central bank and
financial regulators to reassure investors.
Investors will be wading through a flood of earnings this week
as the third-quarter reporting season hits its stride.
What are analysts saying?
Eric Wiegand, senior portfolio manager at U.S. Bank Wealth
Management, told MarketWatch that "we have seen the narrative begin
to shift," to a more cautious one, citing fears over slowing global
growth and whether U.S. companies can maintain their recent strong
earnings growth in the quarters to come.
"Investors are anxious for more information," he said, adding
that while he believes the current backdrop is supportive of
stocks, it will all some down to earnings. "With so many bellwether
names across so many industries reporting this week, things should
get interesting."
U.S.-listed Chinese companies are set to surge out of the gate
this morning, said Joel Kulina, analyst with Wedbush Securities.
It's a "risk on start of the week as investors position
[themselves] ahead of an EPS [earnings per share] ramp," he wrote
in a note to clients.
"Reassurance from the Chinese leadership that they will support
the economy have triggered the biggest one-day increase in equity
indices since 2015 and has given markets everywhere a risk-friendly
bias to start the week," said Kit Juckes, global macro strategist
at Société Générale, in a note.
What stocks are in focus?
Shares of Hasbro Inc.(HAS) were down 5.5% in early morning
action, after the toy maker missed third-quarter profit and revenue
expectations
(http://www.marketwatch.com/story/hasbros-stock-set-for-selloff-after-profit-and-revenue-fall-miss-expectations-2018-10-22)
and announced a restructuring that will cut jobs.
Kimberly-Clark Corp. (KMB) posted lower profits and a management
shuffle
(http://www.marketwatch.com/story/kimberly-clark-names-new-ceo-as-earnings-fall-2018-10-22),
with current COO Michael Hsu taking over as CEO from Thomas Falk,
effective Jan. 1. Despite beating analysts earnings and revenue
estimates, the stock was down 0.6% Monday morning.
Energy services company Halliburton Co.(HAL) on Monday topped
third-quarter profit
(http://www.marketwatch.com/story/halliburton-beats-estimates-despite-weak-demand-2018-10-22)
and revenue estimates, though shares fell 2.2%
Shares of Chinese e-retailer JD.com, Inc. (JD) surged in
premarket trading, after a strong showing on Chinese markets
Monday. The stock is up 4% in early morning trading.
Another beneficiary of the Chinese rally was Ctrip.com
International, Ltd. (CTRP), China's largest online travel agency.
Shares in the company rose 3.4% Monday morning.
Shares of American Railcar Industries Inc.(ARII) soared more
than 50% after it announced a deal that would see it acquired by a
fund managed by investment firm ITE Managment L.P. Under the terms
of the deal, valued at $1.75 billion, ITE will pay $70 for each
share of the company
(http://www.marketwatch.com/story/american-railcar-to-by-bought-in-a-175-billion-deal-by-ite-giving-icahn-a-757-million-profit-2018-10-22),
51% above Friday's closing price of $46.29. Billionaire activist
investor Carl Icahn's Icahn Enterprises L.P. (IEP) is the majority
owner of American Railcar, with 11.9 million shares, or 62.2% of
the shares outstanding, according to FactSet data.
What data are in store?
In a light day on the economic calendar, the Chicago Fed
National Activity Index decreased to +0.17 in September from +0.27
in August.
How are other markets trading?
The Shanghai Composite Index closed 4.1% higher
(http://www.marketwatch.com/story/big-stock-rally-in-china-bolsters-markets-across-asia-2018-10-21),
it's best day in more than 2 years, according to FactSet, while the
smaller Shenzhen Composite soared more than 5%.
European stock markets rose modestly
(http://www.marketwatch.com/story/europe-picks-up-on-global-gains-with-italian-stocks-in-the-lead-2018-10-22),
with the Stoxx Europe up 0.1% during trading Monday. In London, the
FTSE was also up
(http://www.marketwatch.com/story/banks-miners-led-the-way-higher-for-ftse-100-2018-10-22),
0.5%.
Oil futures fell slightly Monday
(http://www.marketwatch.com/story/oil-pauses-for-direction-as-traders-monitor-us-saudi-tensions-2018-10-22),
while gold prices dropped 0.6%. The U.S. dollar rose
moderately.
(END) Dow Jones Newswires
October 22, 2018 10:16 ET (14:16 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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