NEW YORK, Oct 23 — Wall Street sank more than 1 per cent today as disappointing forecasts from industrial bellwethers Caterpillar and 3M piled on to concerns over Saudi Arabia’s diplomatic isolation, Italy’s finances and trade-war fears.
All the three major Wall Street indexes were trading below their 200-day moving averages, a key technical indicator of long-term momentum and all 11 major S&P sectors were in the red, continuing what has been a punishing month for US stocks.
Caterpillar tumbled 8.3 per cent after the heavy-duty equipment maker maintained its 2018 earnings forecast, while 3M Co slid 6.4 per cent after the company cut its full-year profit forecast due to currency headwinds.
The forecasts from the two Dow Industrials triggered alarm bell over the impact of rising borrowing costs, wages and tariffs on corporate profits. Industrial stocks slid 1.90 per cent.
“This is more about global GDP because 3M is cutting its FY forecast so that is a worry for US investors worried about slowing growth: “Is the world slowing down and will our companies feel the pain?”, said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh.
Profits of S&P 500 companies are expected to have jumped nearly 22 per cent in the third quarter, slower than the previous two quarters, according to Refinitiv data.
Growth is expected to slow further in the fourth quarter, as the effects of U.S tax cuts fade and the impact of tariffs and rising costs rise.
Amazon, Alphabet, Microsoft and Intel, all due to report this week, were down between 1.7 per cent and 2.6 per cent. Apple fell 1.6 per cent.
A slew of geopolitical concerns have converged to send investors scrambling out of stocks.
“There are a number of underlying risk factors in the markets right now, be it US interest rates, Brexit, Italian debt, trade wars or emerging markets,” Craig Erlam, senior market analyst at online forex broker Oanda, said in a note.
“These are all destabilizing factors and sentiment may finally be caving under the weight of it all.”
At 9.53am EDT the Dow Jones Industrial Average was down 338.11 points, or 1.34 per cent, at 24,979.30, the S&P 500 was down 40.62 points, or 1.47 per cent, at 2,715.26 and the Nasdaq Composite was down 132.07 points, or 1.77 per cent, at 7,336.56.
All 11 major S&P sectors were in the red, with the smallest losses posted by the defensive utilities, real estate and consumer staples indexes.
Energy stocks fell 2.59 per cent, the most among the S&P sectors, as oil prices fell after Saudi Arabia said it could supply more crude quickly if needed.
Chipmakers, which rely heavily on China for a significant portion of their revenue, leading the losses among tech stocks. All members of the Philadelphia semiconductor index were in the red, led by Nvidia’s 4.4 per cent slide.
However, all earnings report on the day were not disheartening.
McDonald’s rose 4.7 per cent after it beat estimates for quarterly same-store sales as strong demand in international markets.
Verizon gained 2.8 per cent after beating estimates for profit and net new phone subscribers.
Declining issues outnumbered advancers for a 5.97-to-1 ratio on the NYSE and a 4.44-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 81 new lows, while the Nasdaq recorded one new highs and 268 new lows. — Reuters
Source: The Malay Mail Online