Dow Stages Late Rally to Keep Weekly Win Streak Alive
February 08 2019 - 5:33PM
Dow Jones News
By Corrie Driebusch and Akane Otani
The Dow Jones Industrial Average pared its losses heading into
Friday's closing bell to notch its seventh consecutive weekly gain,
a sign of the stock market's resilience even in the face of
heightened uncertainty.
A late-afternoon comeback left the blue-chip index down 63.20
points, after earlier falling more than 285 points. The index
surged in the final 10 minutes of the session to secure a 0.2% gain
for the week--its longest winning streak since November 2017 when
the market rose for eight straight weeks.
Stocks had been under pressure earlier in the day amid growing
investor unease about shaky economic data from the eurozone,
renewed trade uncertainty and concerns about weakening corporate
earnings.
Investors were jolted Thursday when the European Commission
slashed its growth forecasts for Germany and Italy, and the Bank of
England sounded a warning on a slowing global economy. Later that
day, White House economic adviser Larry Kudlow said the U.S. and
China were still "far away" from securing a trade deal.
"I'm worried," said Andrew Slimmon, senior portfolio manager
with Morgan Stanley Investment Management. While global growth is
an ever-present concern, he said he is focusing on recent signs of
a slowdown in corporate earnings.
For the first quarter, companies in the S&P 500 are now
expected to post their first year-over-year profit decline in
nearly three years. The swift drop in estimates over recent weeks
has Mr. Slimmon worried about two consecutive quarters of earnings
contraction.
"As much as companies look like they made fourth-quarter
numbers, the 2019 estimates are dropping, and it strengthens my
concern," he said.
The Dow industrials ended the day down 0.3% at 25106.33. The
S&P 500 rose 1.83 points, or 0.1%, to 2707.88, while the Nasdaq
Composite added 9.85 points, or 0.1%, to 7298.20. All three indexes
ended the week higher.
Earnings reports swung individual stocks. Skechers USA soared
$4.21, or 15%, to $31.91 after the shoe company offered a
stronger-than-expected first-quarter outlook. Mattel jumped 2.87,
or 23%, to $15.23 after its results topped analysts' estimates for
earnings and revenue. Hasbro shares fell 86 cents, or 1%, to $89.39
after the toy company posted a drop in quarterly sales.
Despite weakening corporate guidance and some disappointing
economic data out of Europe, many other investors continue to
believe the global expansion has further room to run.
"We're not on the verge of a recession," said Isabelle Mateos y
Lago, managing director and chief multiasset strategist at
BlackRock, who believes investors can still find opportunities in
stocks, particularly in emerging markets and the U.S. "You can't be
as aggressive as when the economy was expanding faster -- but we do
still see scope for returns in equities."
A report Friday showed German exports rose more than expected in
December, offering analysts some relief after data a day earlier
showed an unexpected slump in industrial production at the end of
the year. Still, some analysts warn that economic data could
deteriorate further. That could keep stocks under pressure for much
of the next few months.
"We think the consensus is probably still a bit too optimistic
in terms of expectations for earnings growth this year," said
Andrea Cicione, head of macro strategy at TS Lombard, who noted
U.S. multinationals' exposure to foreign markets makes them
vulnerable to slowdowns in China and other emerging markets. "The
slowing of growth in China and the rest of Asia -- well, that's
having an impact on profits."
In Asia, Japan's Nikkei Stock Average slumped 2% to its lowest
level in a month, hurt by downbeat earnings forecasts from a number
of companies. Hong Kong's Hang Seng, which reopened for trading
following the Lunar New Year holiday, edged down 0.2%.
Write to Corrie Driebusch at corrie.driebusch@wsj.com and Akane
Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
February 08, 2019 17:18 ET (22:18 GMT)
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