U.S. stocks rebounded from intra-day lows on Tuesday. Markets managed to recover from initial losses after guidance from Caterpillar and 3M Company dented investor sentiment. However, markets still closed lower, with the S&P 500 ending in the red for the fifth straight day. Worries about the earning outlook led to huge selloffs. Also, major decline in the Chinese markets raised concerns over global economic growth.
The Dow Jones Industrial Average (DJI) declined 0.5% to close at 25,191.43. The S&P 500 lost 0.6% to close at 2,740.69. The Nasdaq Composite Index closed at 7,437.54, declining 0.4%. A total of 9.1 billion shares were traded on Tuesday, lower than the last 20-session average of 7.9 billion shares. Decliners outnumbered advancers on the NYSE by a 2.44-to-1 ratio. On Nasdaq, a 2.13-to-1 ratio favored declining issues.
How did the Benchmark Perform?
The Dow shed 125.98 points, after declining more than 500 points at one time of the day. Guidance from Caterpillar, Inc. CAT and 3M Company MMM dented investor sentiment. Shares of Caterpillar and 3M plummeted 7.6% and 4.4%, respectively. Caterpillar has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
The S&P 500 gave up 15.19 points, as energy stocks weighed on markets. The Energy Select Sector SPDR (XLE) declined 2.6%. The Industrial Select Sector SPDR (XLI) lost 1.7%. At its session lows, the S&P 500 had lost more than 2%. The S&P 500 entered its fifth straight day of losses and briefly dipped below the lows hit in early October.
The tech-heavy Nasdaq, which had ended in the green a day earlier, shed 31.09 points. At its session lows, the Nasdaq had lost more than 2%. Shares of Amazon.com, Inc. AMZN and Facebook, Inc. FB declined 1.2% and 0.3%, respectively.
Worries of Global Growth Weigh on Markets
Concerns about global economic growth escalated last week after China, the second-largest economy, said that its economy slowed in the July-September quarter, growing 6.5%, down from 6.7% registered in the previous quarter. On Tuesday, major indexes fell once again in Asia, heightening worries about slowing global growth.
Investors have been worrying that if China experiences further crisis, the pain could spread out to other emerging economies and eventually to developed economies like the United States. Moreover, on Tuesday, the European Commission reportedly asked Italy’s new government to revise its budget. This made investors even more jittery, leading to huge selloffs.
Investors Jittery Before Earnings Season Takes Pace
The earnings season is in full swing a slew of megacap companies slated to report corporate results this week. On Tuesday, investors’ sentiments were dented after heavy-equipment Caterpillar maintained its 2018 earnings forecast after having made forecast increases in the last two quarters. Also, 3M cut its full-year profit outlook citing foreign currency-related challenges. This dampened investors’ spirits leading to huge selloffs. However, markets bounced from intra-day lows after McDonald’s Corporation MCD posted impressive quarterly results and shares of The Procter & Gamble Company PG gained 0.7%.
The United States and China have implemented tit-for-tat tariffs on goods worth billions. Since then, shares of trade sensitive companies have been suffering. Higher material costs, driven by higher steel prices and tariffs, have been affecting industrials like Caterpillar and 3M. On Tuesday, industrial stocks once again took a beating after Caterpillar and 3M posted their quarterly results, leading to a selloff.
Stocks That Made Headlines
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
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Caterpillar Inc. (CAT) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Procter & Gamble Company (The) (PG) : Free Stock Analysis Report
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