Benchmarks ended in the red on Monday after Caterpillar posted dismal earnings in the fourth quarter of 2018. Also, Nvidia lowered its quarterly guidance citing China’s economic slowdown which weighed on the broader markets. Meanwhile, Trump, in an interview, stated that he was doubtful that a border-wall funding deal would be reached and shutdown fears reemerged.
Market watchers also awaited the result of the latest round of trade negotiations between the United States and China. Finally, Fed Chief, Jerome Powell is to announce future U.S. monetary policy at the end of a two-day Fed meeting, slated to begin on Tuesday.
The Dow Jones Industrial Average (DJI) decreased 0.8%, to close at 24,528.22. The S&P 500 decreased 0.8% to close at 2,643.85. The tech-laden Nasdaq Composite Index closed at 7,085.68, gaining 1.1%. The fear-gauge CBOE Volatility Index (VIX) increased 8.9% to close at 18.97. Decliners outnumbered advancers on the NYSE by a 2.09-to-1 ratio. On Nasdaq, a 2.05-to-1 ratio favored declining issues.
Caterpillar Weighs on the Dow
The Dow lost 209 points to end the session in the red. At its session lows, the Dow had fallen by as much as 400 points. Losses for the 30-stock index were triggered by a decline in shares of bellwether Caterpillar CAT. The construction and mining giant declined steeply after reporting dismal earnings in the fourth quarter of 2018.
Caterpillardelivered adjusted earnings per share of $2.55 in fourth-quarter 2018, lagging the Zacks Consensus Estimate of $2.98. However, the figure improved 18% year over year driven by continued strength in many of its end markets and incessant focus on cost control. Caterpillar’s shares dipped 6% in pre-market trading as results fell short of expectations. (Read More)
S&P 500 and Nasdaq Close in the Red
The S&P 500 declined 20.9 points to also end in negative territory. Of the 11 major segments of the S&P 500, nine ended in the red. The decliners were led by technology, healthcare and tech shares. The Technology Select Sector SPDR ETF (XLK), Health Care Select Sector SPDR ETF (XLV) and Energy Select Sector SPDR ETF (XLE) declined 1.3%, 1.1% and 1.1%, respectively.
Meanwhile, the Nasdaq fell 79.2 points to also close in the red. Shares of Apple AAPL, Microsoft MSFT, Amazon AMZN and Facebook FB declined 0.9%, 2%, 2% and 1%, respectively.
Further, shares of NVIDIA Corporation NVDA declined 13.8% after the chipmaker reduced revenue guidance for the fiscal fourth quarter to $2.2 billion from the previous level of $2.7 billion. The company cited “deteriorating macroeconomic conditions, particularly in China” as the primary reason the guidance reduction.
Following such developments, other chipmaker stocks such as Advanced Micro Devices, Inc. AMD and Micron Technology, Inc. MU declined 8% and 2.3%, respectively. As a matter of fact, the broader VanEck Vectors Semiconductor ETF (SMH) dipped about 2% after such events unfolded. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shutdown Fears Reemerge
In an interview with the Wall Street Journal, President Donald Trump stated that he expected “less than 50-50” odds of the border-wall funding deal to go through. Trump also sounded doubtful about the possibility of a resolution by the group of 17 lawmakers before Feb 15, the deadline of the new deal. According to The Journal Trump also stated he would build the wall “anyway, using emergency powers if need be.” Such developments weighed on the markets.
US-China Trade Negotiations, Fed Meeting Kept Investors Hooked
Market watchers kept a close watch on the latest round of trade talks between the United States and China, led by U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He. Scheduled for later this week, the meeting is aimed at seeking a resolution to the U.S.- China trade war.
Meanwhile, investors also awaited the outcome of a two-day Federal Reserve meeting slated to begin Jan 29. It is widely expected that there will be no changes in the key interest rates in this meeting. After the conclusion of the meeting, Fed Chief, Jerome Powell is scheduled to hold a news conference and is expected to shed light on the future of monetary policies in America.
Stocks That Made Headlines
Rockwell Automation Q1 Earnings, Revenues Top Estimates
Rockwell Automation Inc. ROK delivered adjusted earnings in first-quarter fiscal 2019 (ended Dec 31, 2018), up 13% from the prior-year quarter figure. (Read More)
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