BUSINESS Wall Street drops as trade worries, earnings weigh

BUSINESS

Wall Street drops as trade worries, earnings weigh

Reuters

07:43, May 04, 2018

WallStDrops.PNG

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, US, May 2, 2018. (Photo: Reuters) 

US stock indexes were down on Thursday, but off their session lows on what some traders said was due to technical buying amid worries of the outcome of US-China trade talks, rising interest rates and disappointing earnings reports.

A sharp drop out of the open had pushed the benchmark S&P 500 below its 200-day moving average, a key technical indicator of longer-term momentum, for the first time since April 6.

The Dow Jones Industrial Average also dipped below its 200-day mark before both the indexes staged a fight back to reclaim those levels in early afternoon trading.

“I think it was technical. The market’s trying to stabilize and trying to get back on the other side,” said Ken Polcari, Director of the NYSE floor division at O’Neil Securities in New York.

While it is considered highly unlikely that the US delegation in Beijing will strike a breakthrough deal to fundamentally change China’s policies, a package of short-term Chinese measures could delay a US decision to impose tariffs on about $50 billion worth of Chinese exports.

The Federal Reserve on Wednesday reaffirmed its outlook for more rate hikes and expressed confidence that a recent rise in inflation near to its target would be sustained.

“It’s definitely rate hikes and tariffs, and the sense that earnings have peaked,” said Paul Brigandi, head of trading at Direxion Funds in New York.

“There is a lot of negative sentiment out there ... (on fears) that this really is the end of the cycle and we could see a slowdown at the same time rates are rising.”

At 13:22 p.m. ET, the Dow was down 24.97 points, or 0.10 percent, at 23,900.01, above its 200-day average of 23,750.83.

The S&P was down 7.28 points, or 0.28 percent, at 2,628.39, slightly above its 200-day average of 2,615.03.

The Nasdaq Composite was down 11.73 points, or 0.17 percent, at 7,089.17.

Bank stocks dropped, tracking a pullback in US Treasury yields after the ISM non-manufacturing data for April came in below estimates.

Among stocks, Tesla fell 6.3 percent after Chief Executive Officer Elon Musk cut off analysts asking about the company’s profit potential, despite promises that production of the troubled Model 3 electric car was on track.

Declining issues outnumbered advancers for a 1.45-to-1 ratio on the NYSE and for a 1.83-to-1 ratio on the Nasdaq.

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