Major U.S. market indexes closed in the negative territory on Wednesday on the back of weak retail sales for September and fresh tensions between the United States and China. In fact, such negative factors overshadowed the day’s better-than-expected earnings from some of the top corporate giants.
The three major indexes— the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite — finished the day in red on Oct 16. Dow Jones hit 27,001.98 after losing 0.1%, the S&P 500 finished at 2,989.69 after shedding 0.2% and the tech-laden Nasdaq Composite closed at 8,124.18 after declining 0.3%.
The fear-gauge CBOE Volatility Index (VIX) gained 0.3% to close at 13.58 on Wednesday. Finally, advancers outnumbered decliners on the NYSE by a 1.21-to-1 ratio.
Retail Sales Slide
Retail sales unexpectedly declined for the first time in seven months in September, raising concerns about the impact of the ongoing trade dispute on consumer spending.
According to the Commerce Department, retail sales declined 0.3% last month as households pulled back their spending on online purchases, building materials and automobiles. Auto sales shed 0.9% in September and receipts at gasoline stations dropped 0.7%. Sales of building material and garden equipment etc went down 1% while sales of recreational items (books, sporting goods, hobby and musical instruments etc) shed 0.1%.
China Threatens Retaliation on US’s support of Hong Kong Protests
Investors remained concerned as China vowed “strong countermeasures” after U.S. House of Representatives passed a set of bills on Oct 16 that aided Hong Kong protesters.
Three measures were approved on Wednesday. One supported the right of Hong Kong citizens' to protest, another allowed the United States to check on Chinese influence over the concerned region and the last one prevented American weapons from being used on protesters by the police.
House Speaker Nancy Pelosi said that the three bills are a reminder of how U.S. must stand up for human rights despite its considerable commercial interests in China.
In response, China said that should the legislations become law, it would harm both countries’ interests and U.S.-China relations. China also vowed of “strong countermeasures” in answer to the United States’ “wrong decisions” in order to protect the Asian country’s “sovereignty, security and development interests.”
Impressive Earnings Pour In
Shares of Bank of America Corporation BAC gained 1.5% on Wednesday after the bank reported quarterly earnings of $0.56 per share, outpacing the Zacks Consensus Estimate of $0.50. The bank’s revenues of $22.81 billion for Q3 also beat the Zacks Consensus Estimate by 2.82%. Bank of America’s growth in global banking business led three out of the bank’s four main divisions to report gains in revenue. (Read more)
Shares of United Airlines Holdings Inc. UAL added 2.1% on Oct 16 after the airline reported quarterly earnings of $4.07 per share which beat the Zacks Consensus Estimate of $3.94. The Chicago-based carrier raised its earnings forecast for the year as travel demand continued to increase. (Read more)
Both Bank of America and United Airlines carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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