Following the trend set by other markets, Wall Street finished its first trading day for the week on the red territory. Poor data from China at the beginning of the week and the reduced global growth forecast by the International Monetary Fund renewed fears that the global economy is slowing down.
The blue-chip index Dow Jones Industrial Average wiped out 300 points, with Goldman Sachs and Caterpillar performed worst. Thus, the benchmark ended its fourth consecutive positive session.
The broader index S&P 500 wiped out 1.4% of its value after the communications and industrial sector experienced significant falls.
The technology index Nasdaq Composite ended with a decrease of 2.14%.
On Monday, the IMF lowered its forecast for the global economy by predicting it would grow in 2019 at its weakest pace in three years and warned that trade pressures in recent months would cause further problems.
Major indexes extended their losses after releasing the report that sales of existing homes in the US have reached their 3-year low in December. The exchange-traded fund (ETF) iShares U.S. Home Construction ETF (ITB) dropped by 2%.
Meanwhile, the planned meeting this week between Trade Representative Robert Lighthizer and Chinese vice ministers of trade has been called off due to ongoing differences.
"China posts slowest economic numbers since 1990 due to U.S. trade tensions and new policies. Makes so much sense for China to finally do a Real Deal, and stop playing around!", wrote Donald Trump on Twitter.
In the bond markets, the yields on US Treasuries fell due to continued US administration paralysis and trade problems between Washington and Beijing. The yields on 10-year government bonds declined by 4 basis points to 2.755%, while those on 30-year Treasuries reached 3.074%.
In the currency markets, the value of the US dollar rose as a result of the revised IMF economic growth forecasts. The dollar index, which measures the value of the greenback against six competing currencies, reached 96.30 points, although it even rose 96.484 points before.
Corporate stocks performance
The stocks of eBay jumped by 6.1% after the hedge fund Elliott Management revealed that it bought 1.4 billion USD stake in the company.
Top companies like Apple and Amazon are intimately affected by tariff wars, especially with China. Apple relies on importing its manufactured goods from China while a huge variety of products sold on Amazon are also made in China. Actual profitability of both firms can be impacted by even single-digit tariff increases on either side of the equation, which affects trader confidence in their stock valuation. The stocks of Apple wiped out 2.25%, while those of Amazon decreased by 3.77%.
The other FAANG stocks were also on the red, with Alphabet decreasing by 2.4%, Netflix wiping out 4.11% and Facebook moving down by 1.65%.
The stocks of Johnson & Johnson also fell by 1.45% despite news that it beat consensus expectations. The downtick is the result of the firm issuing a weaker-than-expected revenue outlook for the current quarter.
Tencent Music rallied as much as 7% and cleared a pair of key buy points, including a standard entry of 14.85 USD in a narrow IPO base.
Restaurant stocks also fared relatively well, including McDonald's and Wingstop. The latter has formed a handle after a recent breakout stumbled. The new handle, which has formed over the past five to six sessions and is best viewed on a daily chart, offers a proper buy point of 72.32 USD.
Corporate earnings reports
The pharmaceutical and personal care company Johnson & Johnson tops fourth-quarter expectations but signals sales to slow this year. Psoriasis treatments and cancer drug sales supported the company's profits, while sales of its signature baby products and other consumer goods showed slight improvement. In the fourth quarter, Johnson & Johnson reported net income of 3.04 billion USD, or 1.12 USD per share, up from a loss of 10.7 billion USD, or a loss of 3.99 USD per share a year earlier due to amortization expenses and special items. The pharmaceutical and personal care company earned 1.97 USD per share, above the 1.95 USD per share expected by analysts and after excluding an amortization expense of about 1 billion USD, 1.29 billion USD in after-tax litigation expenses and other charges. The net sales rose by 1% to 20.4 billion USD, above expectations of 20.2 billion USD. The company has now beaten consensus earnings estimates 21 quarters in a row and revenue 14 of the past 21 quarters.
Meanwhile, the Swiss bank UBS reported lower earnings for the fourth quarter earnings, stuck by the slowdown in its core business with wealth management, as well as weaker performance in the segment of investment banking. The bank's profit before taxes is 862 million USD, and on a corrected basis it drops to 860 million USD, set in terms that the Chief Executive Officer described as "historically heavy". Nearly 8 billion USD new net cash flows expired in the last three months of last year by the Swiss Bank Welfare Management Unit, which accounts for assets worth over 2 trillion USD. This is a closely monitored indicator of the future earnings of the financial institution.
Posted from my blog with SteemPress : http://financeandmarkets.com/wall-street-failed-to-reverse-the-trend-and-ended-in-red/