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Stocks Slide Amid Global Growth Concerns
18-Oct-18 16:25 ET
Dow -327.23 at 25379.45, Nasdaq -157.56 at 7485.33, S&P -40.13 at 2768.92

https://www.briefing.com/investor/markets/stock-market-update/2018/10/18/stocks-slide-amid-global-growth-concerns-.htm

[BRIEFING.COM] The S&P 500 fell for the ninth time in the last 11 sessions on Thursday, losing 1.4%, as concerning global developments dampened buying interest. The benchmark index opened just modestly lower, but started extending losses soon thereafter. However, the S&P 500 did close a hair above its 200-day moving average (2768.02), a silver lining on a day hard-pressed for good news.

As for the other major averages, the Dow Jones Industrial Average lost 1.3%, the Nasdaq Composite lost 2.1%, and the Russell 2000 lost 1.8%.

The stock market opened slightly lower after disappointing news overseas. China's Shanghai Composite tumbled 2.9%, extending its yearly loss to nearly 25% and touching a four-year low, amid investor concerns over slowing economic growth. In addition, Japan's Nikkei fell 0.8% after the country reported its first year-over-year export decline (-2.1%) since November 2016. Meanwhile, burgeoning angst that the Italian budget situation could get nasty and upset global financial markets sent European indices lower.

Back to the home front, U.S. Treasury Secretary Steven Mnuchin added to the uncertainty when he announced that he would be pulling out of next week's Future Investment Initiative conference in Saudi Arabia. The decision comes as investigators seek answers over the disappearance and alleged murder of dissident Saudi journalist and Washington Post columnist Jamal Khashoggi.

In equities, the growth-stocks in the information technology (-2.0%) and consumer discretionary (-2.1%) sectors that have led this mature bull market did not provide any support on Thursday. The information technology sector relinquished its lead as the best-performing S&P 500 group year-to-date to health care, which was down 1.1% on Thursday. For comparison, the tech sector is still up 11.1% on the year, while health care is up 11.8%. The S&P 500 is higher by 3.6%.

Also, the industrials sector (-1.8%) was another notable laggard following some discouraging earnings and guidance. United Rentals (URI, 118.13, -1.30, -1.0%) topped third quarter expectations but lowered its free cash flow guidance. Meanwhile, Snap-On (SNA 151.47, -16.10, -9.6%) came up shy of third quarter revenue estimates, and Textron (TXT 57.49, -7.29, -11.3%) fell well short of third quarter earnings and revenue estimates.

In other corporate news, Dow component Travelers (TRV 125.14, -1.30) fell 1.0% despite reporting better-than-expected profits for the third quarter; Netflix (NFLX 346.71, -17.99) fumbled 4.9% after an NBC News report showed that the WSJ is investigating the company's corporate culture; and Philip Morris International (PM 87.52, +2.96, +3.5%) was one of the best-performing S&P 500 components after reporting upbeat third quarter results and reaffirming its guidance for the fiscal year.

Separately, Treasuries reclaimed their early losses amid Thursday's equity slide with the 2-yr yield and 10-yr yield settling unchanged at 2.88% and 3.18%, respectively. The 2-yr yield had climbed three basis points to 2.91%, briefly touching a 10-yr high in early morning trading. On a related note, the U.S. Dollar Index rose 0.4% to 95.69.

In energy, WTI crude extended Wednesday's slide, settling 1.4% lower at $68.71/bbl, marking a one-month low. The oil-sensitive energy sector closed 0.5% lower.

Reviewing Thursday's economic data, which included the weekly Initial Claims report, the Philadelphia Fed Index for October, and the Conference Board's Leading Economic Index for September:

Initial claims for the week ending October 13 dropped by 5,000 to 210,000 (Briefing.com consensus 212,000). Continuing claims for the week ending October 6 decreased by 13,000 to 1.640 million, which is the lowest level since August 4, 1973.
The key takeaway from the report is that it covered the week in which the survey for the October employment report was conducted. Accordingly, with the low level of initial claims, economists will have a basis to forecast another solid increase in nonfarm payrolls.
The Philadelphia Fed Index eased to 22.2 in October (Briefing.com consensus 20.0) from 22.9 in September. The dividing line between expansion and contraction for this regional manufacturing survey is 0.0.
The key takeaway from this report is that manufacturers remain optimistic about the outlook, as 48% of respondents expect business activity to increase over the next six months versus only 14% that expect declines.
The Conference Board's Leading Economic Index increased 0.5% in September (Briefing.com consensus +0.5%) after increasing an unrevised 0.4% in August.
The key takeaway from the report is that there was widespread strength in the basket of leading indicators. The strongest contribution came from average consumer expectations for business conditions (+0.14 percentage points), which should be constructive for consumer spending activity.

On Friday, investors will receive the Existing Home Sales report for September.

Nasdaq Composite +8.4% YTD
S&P 500 +3.6% YTD
Dow Jones Industrial Average +2.7% YTD
Russell 2000 +1.6% YTD