U.S. Stocks Open Higher After Shaky Start to the Week
30 Octobre 2018 - 03:16PM
Dow Jones News
By Christopher Whittall
Global stocks showed tentative signs of stabilizing Tuesday
following another turbulent session on Wall Street triggered by a
further slide in technology shares.
The S&P 500 rose 0.5% in early trading after shedding 0.7%
Monday, teetering on the brink of correction territory, having
tumbled 9.9% from its recent peak. The Dow and Nasdaq rose less
than 0.5% in the first few minutes of trading in New York.
The Stoxx Europe 600 swung between small gains and losses. The
pan-European index missed the late-reversal in U.S. stocks Monday,
notching a rise of 0.9% to start the week. Most markets in the
Asia-Pacific region were higher, led by Japan's Nikkei Stock
Average.
Stocks markets have whipsawed in recent weeks, with investors
focusing on earnings and the health of the global economy. U.S.
stocks initially headed higher Monday only to slide going into the
close in another volatile session. The S&P 500 is on track for
its worst month since February 2009, when U.S. markets were still
reeling from the global financial crisis.
At the forefront of the recent index losses are the very
companies that led the market rally earlier in the year: technology
companies. Amazon.com Inc. fell into bear-market territory Monday
-- commonly defined as a 20% decline from a recent peak -- erasing
$127 billion from its market value in the space of two sessions.
That came after Amazon reported record quarterly profits last week,
but revenue that fell short of analyst expectations.
Technology stocks "were priced beyond perfection," said Ollie
Brennan, a senior macro strategist at T.S. Lombard.
Mr. Brennan said the losses in the tech sector represent a
healthy adjustment of expectations, even if the size and duration
of the recent market decline have been surprising.
"The selloff was warranted in the bigger picture," said Mr.
Brennan. "There's still impetus for equities to rise. But it's not
going to be a 15% per year rise."
The recent turbulence has come despite U.S. companies hitting
quarterly earnings expectations at the highest rate since 2011.
Analysts will turn their attention later Tuesday to the next batch
of earnings, including Facebook after the market close.
Shares in General Electric rose 2.2% in premarket trade after
the company slashed its quarterly dividend to 1 cent when
announcing its third-quarter results and said it planned to split
up its power unit. Pfizer was off 3.4% in pre-market trade after
the drugmaker narrowed its full-year revenue and profit
targets.
More broadly, investors are struggling to put a firm value on
companies amid concerns over the impact of trade tensions, rising
interest rates, the fading tailwind of corporate tax cuts and
broader questions over the duration of the second-longest economic
cycle in U.S. history.
"We're nine-and-a-half years into the economic cycle. You've got
to feel we're fairly long in the tooth," said Simon Derrick, chief
currency strategist at BNY Mellon, adding he thinks global growth
will peak in 2019.
Demand for haven assets was muted Tuesday, with gold prices
declining 0.3% to $1223.50 an ounce and the yield on the 10-year
Treasury note edging higher to 3.118%, according to Tradeweb, from
3.082% Monday. Yields rise as prices fall.
Travel and leisure stocks weighed on the Stoxx Europe 600.
Shares in Deutsche Lufthansa slumped around 8% after it reported
earnings that fell short of analyst expectations.
Shares in BNP Paribas fell 2.6% after the French banking giant
reported a third-quarter rise in net profit compared with the
previous year, but a decline in revenue and operating income.
Shares in BP rose 3.2% after it said profits more than doubled
in the third quarter. Volkswagen reported a rise in profits,
sending shares up 3.6%.
Most markets were higher In the Asia-Pacific region. Japan's
Nikkei Stock Average rose 1.5%, China's Shanghai Composite Index
climbed 1% and Australia's S&P/ASX 200 gained 1.3%. Hong Kong's
Hang Seng Index bucked the trend, falling 0.9%.
Traders in the region were also keeping a close eye on the yuan
after China guided its currency to its weakest official level in a
decade on Tuesday. The recent fall in the currency has reignited
speculation about whether further weakness could spark a capital
flight from the world's second-largest economy.
In commodities, Brent crude oil prices were off 1.1% at $76.55 a
barrel.
Investors will be looking ahead to a raft of data releases this
week to gauge the health of the U.S. economy. Economists expect the
U.S.-based Conference Board to announce a decline in consumer
confidence in October on Tuesday, after it hit an 18-year high in
September.
Riva Gold and Saumya Vaishampayan contributed to this
article.
Write to Christopher Whittall at
christopher.whittall@wsj.com
(END) Dow Jones Newswires
October 30, 2018 10:01 ET (14:01 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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