Stocks were whipsawed Wednesday, after rallying in the early going after a round of upbeat earnings from some corporate heavyweights then suffering a pullback that indicated lingering fears over global growth and U.S.-China trade tensions.
What are stocks doing?
The Dow Jones Industrial Average DJIA, +0.17% rose 50 points, or 0.2%, to 24,450, while the S&P 500 index SPX, -0.29% fell 4 points, or 0.1%, to 2,629. The Nasdaq Composite COMP, -0.50% rose 16 points, or 0.2%, to 7,004.
At session highs, the Dow had risen 296 points, the S&P had advanced 20 points, while the Nasdaq was up as much as 64 points Wednesday morning.
What’s driving the market?
Earnings season is in full swing, and investors are laser-focused on fourth quarter results, but more important, what corporate executives are saying about the outlook for profits and revenue in 2019. Late-Tuesday and early-Wednesday earnings reports have been largely well received by investors, starting with International Business Machines Corp. IBM, +7.70% which was leading Dow gainers after management issued a bullish outlook for profits in 2019.
Wednesday’s action represents a rebound from Tuesday’s selloff that was tied to renewed gloom over the outlook for the global economy, after the International Monetary Fund cut its forecast for world growth and China reported its economy grew at the slowest pace since 1990 last year.
Weakness was also tied in part to an unwinding of optimism over trade talks after news reports said U.S. officials had either canceled or turned down a preparatory meeting with Chinese officials. Losses were trimmed ahead of the closing bell after White House economic adviser Larry Kudlow denied that a meeting had been canceled.
Read: Wall Street worries about China slowdown complicate Trump’s get-tough trade strategy
Citing White House advisers, Reuters reported that President Donald Trump won’t agree to any trade deal with China unless Beijing agrees to make substantive changes to the way it does business, including how it handles intellectual property.
Meanwhile, the Senate was poised to vote Thursday on dueling proposals to reopen the government. A partial shutdown entered its 33rd day on Wednesday amid mounting concerns over its potential impact on the economy. Neither proposal set for a Thursday vote are seen as likely to pass the Senate, but analysts said movement might provide some hope that the long-running impasse might be nearer resolution.
See: Government shutdown likely to end in two weeks, analyst says
What stocks are in focus?
IBM stock was up 7.8% Wednesday. Shares of fellow Dow component United Technology Corp. UTX, +4.78% rose 3.7%, after the company surpassed Wall Street revenue expectations by 7% and earnings forecasts by 66%.
Also in the Dow, shares of Procter & Gamble Co. PG, +4.36% advanced 4.5%, after the firm beat revenue and earnings expectations, and raised the high end of its guidance for 2019 organic sales growth.
Shares of Burger King parent Restaurant Brands International Inc. QSR, +8.78% were in focus after the company named Jose Cil, currently president of Burger King, as chief executive officer. The company also provided upbeat sales data and raised its quarterly dividend by 11% to 50 cents a share from 45 cents. The stock was up 7.1%.
Shares of Kimberly-Clark Corp. KMB, -2.60% were down 2.7%, after the consumer goods company posted a fourth-quarter earnings miss.
Tesla Inc. TSLA, -5.60% shares were under pressure Wednesday, after RBC downgraded the stock to underperform to outperform, while cutting its price target to $245 from $290. The stock was down 2.4%.
Shares of Comcast Corp. CMCSA, +4.52% were up 4%, after the internet-service provider exceeded analysts expectations for profits and sales.
Abbott Laboratories ABT, -2.49% stock was down 2%, after the firm fourth-quarter revenue fell short of expectations.
Shares of Synchrony Financial SYF, +9.87% rose more than 9% Wednesday, after the firm announced that it had extended its partnership with Walmart Inc.’s WMT, +0.77% Sam’s Club, and reported that Walmart had agreed to dismiss a lawsuit against the company.
What are the analysts saying?
“The market is reluctant to overcome fears of slowing global growth, China-U.S. trade relations, and the government shutdown,” Michael Arone chief investment strategist at State Street Global Advisors told MarketWatch.
“The culmination of all that suggests challenges for stocks to move higher, despite earnings that have been better than expected,” he added.
“Yesterday the story was all about weakening global growth, but today it’s all about positive earnings momentum,” Jeffrey Kravetz regional investment director at U.S. Bank Private Client Reserve told MarketWatch Wednesday morning. “Bellwether S&P 500 companies are posting solid earnings, and the outlooks have been good.”
IBM’s fourth quarter earnings report was “arguably its cleanest quarter in years,” wrote Joel Kulina, analyst with Wedbush Securities, in a Wednesday morning note to clients. Investors should take solace in management providing “further evidence of strength in software, analytics and services focused on hybrid cloud and digital strategy.”
“If IBM can deliver, that bodes well for the cloud complex overall,” he wrote.
How did the benchmarks fare yesterday?
On Tuesday, stocks snapped a four-day winning streak, with the Dow DJIA, +0.17% falling 301.87 points, or 1.2%, to end at 24,404.48 and the S&P 500 SPX, -0.29% declining 37.81 points, or 1.4%, to 2,632.90. The Nasdaq Composite COMP, -0.50% fell 136.87 points, or 1.9%, to 7,020.36.
How are other markets faring?
Asian markets traded mostly flat on Wednesday, with Japan’s Nikkei 225 NIK, -0.14% index closing 0.1% lower, while Hong Kong’s Hang Seng HSI, +0.01% index was virtually unchanged and the Shanghai Composite Index SHCOMP, +0.05% rose less than 0.1%.
In Europe, stocks were mixed, with the Stoxx Europe 600 SXXP, -0.06% closing down 0.1%, while the FTSE 100 UKX, -0.85% ended the day 0.8% lower.
Crude oil CLH9, -1.25% failed to hold early gains, with the U.S. benchmark edging into negative territory, while gold GCH9, +0.07% was virtually unchanged and the U.S. dollar DXY, -0.25% fell 0.2%.