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
DJIA, -0.44%
slid 102 points, or 0.4%, to 25,284, the S&P 500
SPX, -0.13%
fell 3 points, or 0.1%, to 2,722, while the Nasdaq Composite Index
COMP, +0.01%
gained 6 points to 7,207.
What is driving the market?
December West Texas Intermediate oil
CLZ8, -8.26%
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
President Donald Trump may have also helped to exacerbate a selloff in crude-oil prices 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!”
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 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.
Instinet
“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, -2.31%
dropped 2.5% after The Wall Street Journal reported that the aircraft manufacturer withheld information 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, -0.30%
edged up 0.1% on better-than-expected quarterly results.
Apple Inc.
AAPL, -0.82%
remained under pressure, falling 0.6%, after Lumentum Holdings Inc.
LITE, +3.40%
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.
Amazon.com Inc.
AMZN, -0.39%
shares shed 0.3% after the e-commerce giant selected Northern Virginia and New York City for its second and third corporate headquarters.
Shares of Tyson Foods Inc.
TSN, -5.71%
are down 5.9% after the processed-foods company reported fiscal fourth-quarter revenue below Wall Street expectations, and issued weak guidance.
Shares of Advance Auto Parts, Inc.
AAP, +10.36%
surged 11% after the firm beat third-quarter estimates and raised its full-year 2018 guidance.
Johnson Controls International PLC
JCI, +1.48%
shares rose 2.3% after the commercial services firm announced that it will sell its Power Solutions business to Brookfield Business Partners for $13.2 billion in cash.
Vodaphone Group PLC
VOD, +8.12%
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.
The U.S. ran a $100 billion deficit 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 while European stocks were mostly higher. The dollar, measured by the ICE U.S. Dollar Index
DXY, -0.40%
softened and gold
GCZ8, -0.16%
settled lower.
—Mark DeCambre contributed to this article
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Source : MTV
