Benchmarks closed in the negative territory on Thursday as U.S.-China trade jitters clouded investors’ sentiments and overshadowed solid third-quarter earnings from Apple and Facebook.
The Dow Jones Industrial Average (DJI) fell 0.5% or 140.46 points to close at 27,046.23. The S&P 500 declined 0.3% or 9.21 points to close at 3,037.56. Meanwhile, the Nasdaq Composite Index closed at 8,292.3, shedding 0.1% or 11.62 points. The fear-gauge CBOE Volatility Index (VIX) decreased 1.2% to close at 13.06. Decliners outnumbered advancers on the NYSE by a 2-to-1 ratio. On Nasdaq, a 2.08-to-1 ratio favored advancing issues.
How Did The Benchmarks Perform?
As worries regarding U.S.-China trade deal rose, trade-sensitive industrials sector dropped 1.3%, weighing on the Dow heavily. Chipmakers with exposure to China’s market fell and the Philadelphia Semiconductor index dropped 1%.
Uncertainties Hover on “Phase One” Deal Signing
After nearly a year, the United States and China had finally made progress in the trade front in the beginning of October, as both agreed on signing a “Phase one” deal by November. But, on Thursday investor’s sentiments got clouded due to a series of events. Per a Bloomberg news, Chinese officials seem concerned about President Donald Trump’s “impulsive nature.”
The news highlights the fact that Chinese officials are doubtful regarding possibilities of a long-term U.S.-China trade deal. Moreover, APEC’s meeting that was scheduled to be held in Chile had been canceled due to unrelated circumstances. Both US and China were expected to sign the phase one trade deal there.
Trade tensions had infused worries among investors that in turn impacted stocks on Thursday and dragged major indexes lower, in spite of better-than-expected earnings from top companies.
Apple and Facebook’ Solid Earnings Overshadowed
The trade jitters offset solid third-quarter earnings from Apple Inc. (AAPL - Free Report) , Facebook Inc. (FB - Free Report) and many more.
Apple reported fourth-quarter fiscal 2019 earnings of $3.03 per share, beating the Zacks Consensus Estimate by 19 cents. The company also forecasted sales for the holiday shopping quarter ahead of expectations as a survey report from 451 Research pointed that customer satisfaction was 99% for iPhone 10XR, iPhone 10XS and 10XS Max combined. (Read More)
Facebook reported third-quarter 2019 earnings of $2.12 per share, surpassing the Zacks Consensus Estimate by 21 cents. In fact, Asia-Pacific was Facebook’s fastest-growing market in the quarter, driven by growth in India, Indonesia and the Philippines. (Read More)
Apple’s shares that carry a Zacks Rank #3 (Hold) rose 2.3% on Oct 31. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
U.S. economic data are providing more evidence of a slowdown in manufacturing. Chicago purchasing-managers index fell to 43.2 in October from 47.1 in September, much below the consensus estimate of 49.2. In fact, new orders declined to 37 which is the lowest level since 2009.
However, personal spending in September came in line with the consensus estimate, rising 0.2% for seven consecutive months and personal income rose 0.3%.Core inflation also rose 1.7% in September but was lower than August’s 1.8% rise.
The major indexes scored monthly gains boosted by optimism over Brexit deal and better-than-expected third quarter earnings. The Dow rose 0.5% in October, while the S&P 500 rose 2% and the Nasdaq advanced 3.7%.
Third rate cut in a row by the Fed this year also helped benchmarks gain traction. U.S. economy, in the meantime, grew at a better-than-expected rate of 1.9% resulting from higher consumer spending and government expenditure.
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