S&P 500 Ticks Lower as China's Export Growth Stalls
By Anna Isaac and Paul Vigna
Stocks slipped Tuesday as U.S. companies began reporting
earnings and China's exports grew at the slowest pace in three
years, adding to concerns about a wider global slowdown.
The S&P 500 dropped 0.1%, and the Nasdaq Composite lost
0.2%. The Dow Jones Industrial Average swung between small gains
and losses. Elsewhere, the Shanghai Composite Index closed for the
day down 0.3%, while the pan-continental Stoxx Europe 600 index
edged up 0.2%.
A rally in financial stocks helped offset losses in most other
sectors, after JPMorgan and Citigroup reported strong
fourth-quarter results to kick off the corporate earnings
The equity market's gains though have come as corporate earnings
growth in the U.S. has slowed sharply, said Ben May, the director
of global macro research at Oxford Economics, resulting in
stretched valuations. So while the fourth-quarter numbers are
important, more critical will be what executives say about the rest
"It perhaps creates more downside risks if the economy
underperforms or earnings don't improve to the extent expected," he
Banks got off to a mostly strong start to earnings season,
though. Dow component JPMorgan and rival Citigroup reported
strength in their investment banks in the last three months of
2019. Both stocks rose about 2.2%. Those gains helped push the
Nasdaq KBW Bank index up 0.5%.
But Wells Fargo fell 3.9% after reporting its profit sank due to
legal costs incurred from problems in its sales practices.
Delta Air Lines rose 3.4% after the airline said lower fuel
prices and strong demand over the holidays helped boost its profit,
which exceeded analysts' expectations. Meanwhile, Boston Scientific
fell 8.1% after the medical-devices maker warned its sales would
fall shy of expectations.
Also, Visa rose 0.3% after it agreed to buy fintech firm Plaid
for $5.3 billion.
Overseas, exports from China climbed by 0.5% last year, a sharp
comedown from 2018's expansion of nearly 10%, according to data
released Tuesday. Imports dropped 2.8% last year.
While the slowdown comes amid a two-year trade war between the
world's largest economies, China's foreign trade revived in
December as tensions ebbed following signals that Washington was
nearing a trade deal with Beijing. Investors in recent days have
been cautiously optimistic about that accord as they await more
information on the specific terms of the agreement.
China has committed to buying almost $80 billion of additional
manufactured goods from the U.S. over the next two years, Reuters
reported on Tuesday. The Asian giant would also purchase more than
$50 billion more in energy supplies, and boost spending on U.S.
services by roughly $35 billion, the news agency said, citing a
person with knowledge of the matter.
"The overall mood music is positive, but the key thing is what
the actual wording of the agreement is," said Edward Park, deputy
chief investment officer in London for Brooks Macdonald Asset
Management. "Investors need to see real progress on
Separately, China's currency strengthened to its strongest level
since July in offshore trading after the U.S. on Monday dropped it
from a list of currency manipulators, days before the likely
signing of a phase-one trade deal. The yuan pared back its gains
later in the day.
Write to Anna Isaac at email@example.com and Paul Vigna at
(END) Dow Jones Newswires
January 14, 2020 11:36 ET (16:36 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.