By Sue Chang, MarketWatch , Chris Matthews
Dow grounded by Boeing
Stocks failed to take advantage of early gains and turned wobbly
Tuesday as oil prices cratered, dragging the energy sector sharply
lower, and a resolution of the U.S.-China trade war remained
elusive.
Stocks had bounced back in the morning as large-capitalization
technology and internet-related names appeared to have regained
their footing after the Dow and the Nasdaq suffered triple-digit
losses in the previous session.
How are the benchmarks faring?
The Dow Jones Industrial Average slid 102 points, or 0.4%, to
25,284, the S&P 500 fell 3 points, or 0.1%, to 2,722, while the
Nasdaq Composite Index gained 6 points to 7,207.
What is driving the market?
December West Texas Intermediate oil tumbled 7.1% to settle at
$55.69 a barrel, finishing at the lowest for a front-month contract
in almost a year and falling for a record 12th session, according
to FactSet data.
Some investors are viewing the weakness in oil as a sign of
sluggish global economic expansion.
Read: Global growth will slow from here, say Nomura's economists
(http://www.marketwatch.com/story/global-growth-will-slow-from-here-say-nomuras-economists-2018-11-13)
President Donald Trump may have also helped to exacerbate a
selloff in crude-oil prices
(http://www.marketwatch.com/story/oil-prices-under-pressure-with-record-skid-set-to-continue-2018-11-13)
after he voiced disapproval over a potential production cut by
Saudi Arabia and OPEC, and tweeted that prices "should be much
lower based on supply!
(https://twitter.com/realDonaldTrump/status/1062047641889095684)"
Meanwhile, hopes over moderation in trade tensions between the
U.S. and China initially helped to inject some optimism into the
market following a Wall Street Journal report that Treasury
Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He on
Friday about a possible resolution to the continuing trade spat.
The talk between the officials comes ahead of a scheduled meeting
between President Donald Trump and President Xi Jinping set for the
end of the month at the G-20 summit in Buenos Aires.
On Monday, there were media reports
(https://www.bloomberg.com/news/articles/2018-11-12/eu-s-juncker-singals-u-s-car-tariffs-truce-may-not-last-long)
that Trump was focusing on imposing tariffs on automobile imports
and internally circulating a draft report from the Commerce
Department on auto tariffs, a move that could further escalate the
animus between the U.S. and the rest of the world.
What are strategists saying?
"Tailwinds that powered the market earlier this year, like
synchronized global growth and loose monetary policy, have
officially turned into headwinds," Eric Wiegand, senior portfolio
manager at U.S. Bank, told MarketWatch.
"The real struggle for equity prices now are the highly visible
potential for policy errors," Weigand said, arguing that investors
are rightly concerned that the Trump administration will fail to
achieve a rapprochement with China on trade issues, and that the
Fed will raise rates too aggressively, even as inflation pressures
appear to be easing.
Reports that Treasury Secretary Mnuchin spoke with Chinese Vice
Premier Liu about trade issues helped to buoy stock prices this
morning, Wiegand said. "But investors are becoming more
unresponsive to headlines" that suggest a potential easing of trade
sessions, but which lack information about concrete steps to reduce
trade barriers.
"We need actual comments from both Trump and Xi that trade talks
have progressed in order to build a reasonable foundation" for a
sustained rally, said Mike Antonelli, an equity sales trader at
Robert W. Baird & Co.
"After Monday, the S&P 500 now has logged 49 plus/minus 1%
moves in 2018. That's way more than 2017 [at] eight, but it's not
abnormal compared with recent years," said Frank Cappelleri, an
executive director at Instinet, in a note.
"On a 12-month rolling basis, this is just about average. We
expect the big moves to continue, along with volatility," he
said.
Which stocks are in focus?
Boeing Co. (BA) dropped 2.5% after The Wall Street Journal
reported that the aircraft manufacturer withheld information
(https://www.wsj.com/articles/boeing-withheld-information-on-737-model-according-to-safety-experts-and-others-1542082575?mod=searchresults&page=1&pos=1)
from airline managers and pilots regarding a new stall-prevention
system added to two of its airplane models. The new feature may
have been a factor in last month's Lion Air jet crash.
Shares of Home Depot Inc. (HD) edged up 0.1% on
better-than-expected quarterly results
(http://www.marketwatch.com/story/home-depot-raises-guidance-after-earnings-beat-2018-11-13).
Apple Inc. (AAPL) remained under pressure, falling 0.6%, after
Lumentum Holdings Inc. (LITE) cut the iPhone maker's earnings and
revenue outlook, saying it received a request from "one of its
largest industrial and consumer customers for laser diodes for 3D
sensing" to "materially reduce shipments" which many believe is
Apple
(http://www.marketwatch.com/story/apples-stock-dives-further-in-premarket-after-lumentum-cuts-outlook-2018-11-12).
Amazon.com Inc. (AMZN) shares shed 0.3% after the e-commerce
giant selected Northern Virginia and New York City
(https://blog.aboutamazon.com/) for its second and third corporate
headquarters.
Shares of Tyson Foods Inc. (TSN) are down 5.9% after the
processed-foods company reported fiscal fourth-quarter
(http://www.marketwatch.com/story/tyson-foods-shares-sink-after-revenue-miss-and-weak-guidance-2018-11-13)
revenue below Wall Street expectations, and issued weak
guidance.
Shares of Advance Auto Parts, Inc. (AAP) surged 11% after the
firm beat third-quarter estimates
(http://www.marketwatch.com/story/advance-auto-parts-shares-surge-5-premarket-after-earnings-beat-raised-guidance-2018-11-13)
and raised its full-year 2018 guidance.
Johnson Controls International PLC (JCI) shares rose 2.3% after
the commercial services firm announced that it will sell its Power
Solutions business
(http://www.marketwatch.com/story/johnson-controls-selling-power-solutions-for-132-billion-2018-11-13)
to Brookfield Business Partners for $13.2 billion in cash.
Vodaphone Group PLC(VOD.LN) jumped 8% following an earnings call
in which new Chief Executive Nick Reed assured investors that the
company wouldn't cut its dividend, and could even increase payouts
to shareholders as it works to cut costs and leverage.
What data are in the spotlight?
The National Federation of Independent Business small-business
optimism index declined 0.5 point to a seasonally adjusted 107.4 in
October, a four-month low
(http://www.marketwatch.com/story/small-business-sentiment-declines-in-october-to-four-month-low-nfib-says-2018-11-13).
The U.S. ran a $100 billion deficit
(http://www.marketwatch.com/story/us-budget-deficit-widens-to-100-billion-in-october-2018-11-13)
in October, wider than the $63 billion deficit recorded in October
2017 as spending rose by double digits and receipts only increased
by 7%, according to the Treasury Department.
What are other markets doing?
Asian markets were mixed
(http://www.marketwatch.com/story/asian-markets-tumble-following-tech-losses-on-wall-street-2018-11-12)
while European stocks were mostly higher
(http://www.marketwatch.com/story/europe-stocks-follow-global-rebound-higher-2018-11-13).
The dollar, measured by the ICE U.S. Dollar Index , softened
(http://www.marketwatch.com/story/euro-sterling-reverse-mondays-slump-dollar-slips-2018-11-13)
and gold settled lower.
--Mark DeCambre contributed to this article
(END) Dow Jones Newswires
November 13, 2018 15:31 ET (20:31 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.