By Chris Matthews and William Watts, MarketWatch
IBM earnings miss weighs on the Dow
U.S. stocks whipsawed between gains and losses in Wednesday
morning 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 11 points, or less than
0.1%, to 26,442, while the S&P 500 index rose less than a point
to 2,907. The Nasdaq Composite index was up 15 points at 8,015, an
advance of 0.2%.
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 on Tuesday 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.
What's driving the market?
Investors continue to wade through corporate results as the
earnings season moves into full swing, with an earnings miss from
International Business Machines Inc. (IBM) caused the stock to fall
2.3%, weighing heavily on the Dow.
Health care stocks were also burdening the market, led by
insurers Athem Inc. (ANTM), Cigna Corp. (CI) and Dow component
UnitedHealth Group Inc. (UNH), which was down 2.8% on the day after
falling 4% Tuesday. Analysts pointed to
(http://www.marketwatch.com/story/health-care-stocks-are-down-in-early-wednesday-trade-led-by-anthem-cigna-and-unitedhealth-2019-04-17)
the ongoing debate over health care reform, which has taken center
stage in the race for the Democratic nomination for president, and
which could significantly affect profits in the managed care and
health services sectors if reform legislation is ultimately
passed.
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 for
stimulus efforts by Chinese authorities and a potential deal to end
the U.S.-China trade battle that 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) have whipsawed between gains and
losses following the release of its first-quarter earnings, Tuesday
evening. The company announced a record number of subscribers
(http://www.marketwatch.com/story/netflix-reports-record-subscriber-gains-but-forecast-hurts-stock-2019-04-16),
but issued guidance for second quarter that some have interpreted
as disappointing. After rising as much as 2.4% at the start of
trade Wednesday, it fell 0.8%.
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 12.9%, 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 4.8% Wednesday morning.
Shares of PepsiCo Inc.(PEP) were up 3%, 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 8.7%, 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 2.6% 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 2.6%,
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?
"We're in the early days of earnings season, but it feels like
first-quarter earnings will be a bottom, and that's getting baked
into expectations," Kevin Divney, senior portfolio manager at
Russell Investments, told MarketWatch.
"The week after next is when we have the bulk of earnings, so
we're at a pause here" as investors don't yet have a broad enough
picture of management expectations for the remainder of the year,
he added.
"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.. 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 rose 0.1%, 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),
while gold prices ticked lower
(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
(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 11:08 ET (15:08 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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