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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