Dow Suddenly Swings Lower as Global Growth and Trade Risks Weigh

January 23, 2019 11:49 AM UTC

By U.S. stocks swung lower on Wednesday, reversing a strong start to the day as concerns over trade and global economic growth offset solid corporate earnings.

U.S. Stock Market Gives up Gains

U.S. stocks struggle to hold gains late-morning as global growth risks continue to weigh. | Source: Shutterstock

All of Wall Street’s major indexes fell by late morning, with the Dow Jones Industrial Average giving up triple-digit gains. The blue-chip index rose 296 points after the open, which mirrored a positive pre-market session for Dow futures. At the time of writing, the Dow was down 33 points, or 0.1%, at 24,371.36.

The broad S&P 500 Index also reversed gains, falling 0.7% to 2,614.23. Gains were largely contained to consumer staples and utilities, two sectors known for their defensive posture.

A weak performance in communication services weighed on the Nasdaq Composite Index, which fell 1% to 6,955.14.

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U.S. stocks are coming off their biggest one-day loss since Jan. 3, as fears of a slowing Chinese economy weighed on investors’ sentiment. China’s economy grew 6.6% annually in 2018, the slowest since 1990. The International Monetary Fund (IMF) on Monday lowered its outlook on global growth this year and next.

The Tuesday sell-off was accompanied by a sharp rise in volatility, as the CBOE VIX rose nearly 17% to 20.80. On Wednesday, VIX rose more than 3%.

Comcast in Earnings Spotlight

Strong corporate earnings and positive guidance lifted markets at the start of Wednesday’s session.  Dow blue-chip IBM Corp (IBM) surged after the company reported better than expected results and signaled that fast-growing businesses would propel the company’s growth this year.

The tech juggernaut reported per-share earnings of $4.87 on revenue of $21.76 billion. Analysts had forecast profits of $4.82 per share on revenue of $21.76 billion.

Fourth-quarter earnings from Comcast Corporation (CMCSA) were also better than expected thanks to strong performances from its NBCUniversal media unit and internet business. The firm reported per-share earnings of 64 cents on revenue of $27.84 billion. The median estimate was for 62 cents per share on sales of $27.55 billion.

Wall Street is gearing up for another solid quarter of earnings. As of Friday, three-quarters (76%) of S&P 500 companies had reported better than expected profit results and 56% posted revenue surprises, according to FactSet. That data set is based on 11% of S&P 500 companies that have reported earnings so far.

Featured image courtesy of Shutterstock. Chart via TradingView.

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Last modified: July 2, 2020 7:30 PM UTC