Some jitters after Spain signals move to strip Catalonia of independence
U.S. stock benchmarks on Thursday pulled back a day after posting a trio of all-time highs and closing above the psychologically important level of 23,000 for the Dow. Modest losses were driven by a slump in technology and financials shares.
Political tensions in Europe, lackluster economic reports out of China, and the anniversary of the markets' worst percentage drop in history were cited as some of the reasons for uneasiness.
What are stock-index futures doing?
All three benchmarks closed at records on Wednesday (http://www.marketwatch.com/story/dow-industrials-on-track-to-stay-around-23000-milestone-2017-10-18). The Dow Jones Industrial Average declined 91 points, or 0.4%, to 23,065. The S&P 500 index fell 10 points, or 0.4%, to 2,551, with seven of its 11 main sectors trading lower. Technology stocks were hardest hit, down 0.9%. The Nasdaq Composite slumped 51 points, or 0.8%, to 6,572.
See:Dow 23,000 marks fresh history for blue chips (http://www.marketwatch.com/story/dow-23000-marks-fresh-history-for-blue-chips-2017-10-17)
And check out:Dow's historic close above 23,000 belies a flicker of weakness (http://www.marketwatch.com/story/dows-historic-close-above-23000-belies-a-flicker-of-weakness-2017-10-18)
(http://www.marketwatch.com/story/dow-23000-marks-fresh-history-for-blue-chips-2017-10-17)What's driving markets?
Catalonia's president, Carles Puigdemont, failed to meet a demand to give up the region's push for independence. The Madrid government responded by suggesting it will trigger the process for imposing central control (http://www.marketwatch.com/story/spain-to-trigger-direct-rule-of-catalonia-as-standoff-continues-2017-10-19) when it holds a special cabinet meeting on Saturday. A suspension of autonomy in Catalonia could potentially spur fresh protests and instability for one of the eurozone's biggest members.
Stock markets came under pressure following reports that growth in China slowed in the third quarter (http://www.marketwatch.com/story/china-gdp-growth-slows-in-third-quarter-2017-10-18). Stocks in Hong Kong dropped 1.9%, led by losses for property, banking and tech shares.
(https://www.wsj.com/articles/ebay-shares-fall-on-lowered-profit-outlook-1508361244)Thursday also marks the anniversary of the 1987 stock-market crash (http://www.marketwatch.com/story/30-years-after-black-monday-could-stock-market-crash-again-2017-10-16), and some investors have voiced some concerns about how sharp stocks have run up since the November 2016 election, shaking off U.S. political and geopolitical and valuation concerns, among others.
Read:Wall Street pros recall 'sheer panic' of October 1987 stock market crash (http://www.marketwatch.com/story/black-monday-was-baptism-by-fire-for-these-wall-street-pros-2017-10-16)
Many believe stocks will continue to rise on hopes that the administration of U.S. President Donald Trump will get a tax deal done. U.S. Treasury Secretary Steven Mnuchin warned in a recent interview with Politico (http://www.marketwatch.com/story/mnuchin-has-an-important-warning-for-stock-market-investors-2017-10-18)that stocks could take a big hit if tax cuts aren't implemented soon.
Which stocks are in focus?
Earnings season is also a factor Thursday. Philip Morris International Inc.(PM) shares fell 3.9% after adjusted earnings and sales fell short of expectations. Travelers Cos.(TRV) fell 1.1% even as quarterly earnings and revenue beat forecasts.
Verizon Communications Inc.'s (VZ) shares rose 3% after reporting third-quarter results that mostly beat analysts' estimates and affirmed its 2017 outlook.
eBay Inc.(EBAY) saw its shares down 3.3% after the online marketplace cut its annual profit outlook for the second straight quarter (https://www.wsj.com/articles/ebay-shares-fall-on-lowered-profit-outlook-1508361244).
(http://www.marketwatch.com/story/china-gdp-growth-slows-in-third-quarter-2017-10-18)On the heels of those losses for eBay, other technology shares were dragged lower, with Nvidia Corp.(NVDA) sliding 1.7% and Netflix Inc.(NFLX) down 1.6%.
Apple Inc.'s (AAPL) stock dropped 2%, putting it on track to suffer the biggest decline in a month. Also weighing on Apple was a report in The Wall Street Journal that the new Apple Watch's independent cellular connection feature was abruptly cut off in China (http://www.marketwatch.com/story/apple-watch-cellular-feature-cut-off-in-china-2017-10-19), without explanation.
Alcoa Inc.(AA) shares slid 1% after an earnings miss (http://www.marketwatch.com/story/alcoa-misses-on-earnings-but-beats-on-revenue-2017-10-18).
United Continental Holdings Inc.(UAL) fell 2.5% even as the airline reported an earnings beat (http://www.marketwatch.com/story/united-continental-earnings-beat-despite-weather-related-cancellations-2017-10-18) despite weather-related cancellations.
American Express Co.(AXP) shares fell 1.2%. The company topped Wall Street expectations (http://www.marketwatch.com/story/american-express-shares-wobble-after-hours-following-earnings-beat-2017-10-18) on earnings and raised its guidance, and said Stephen Squeri, the current vice chairman, will become chief executive and chairman on Feb. 1 (http://www.marketwatch.com/story/american-express-says-stephen-squeri-to-become-ceo-chairman-2017-10-18).
After the close, PayPal Holdings Inc.(PYPL) is scheduled to report.
What are strategists saying?
"To me, it appears that the Catalan impasse has triggered a global selloff across the equity markets, because the Asian session was rather quiet. The selloff really picked up as European traders stepped in," said Ipek Ozkardeskaya, senior market analyst at LCG, in emailed comments.
"It is difficult to say whether today's modest pullback is in deference to the 1987 crash or something else," said Jack Ablin, chief investment officer at BMO Private Bank.
"While there is no question that markets are overvalued and we could see some corrections, the path of least resistance for stocks is still to go higher. I will start reducing risk when credit spread begin to widen and when we see sustained signs of rising inflation," Ablin said.
What economic reports are due?:
First-time jobless claims fell to 222,000 in the week ended Oct. 14, marking the lowest level for claims from those seeking employment benefits since March 1973 (http://www.marketwatch.com/story/initial-jobless-claims-fall-to-levels-not-seen-since-march-1973-2017-10-19), highlighting continued strength in the labor market. Economists polled by MarketWatch had forecast claims to come in at 244,000.
Meanwhile, the Philadelphia Fed manufacturing index, or the Philly Fed index, surged four points to 27.9, representing a 5-month high (http://www.marketwatch.com/story/philly-fed-manufacturing-index-lurches-to-a-5-month-high-in-october-2017-10-19). Any reading over zero signals improving conditions. Economists had forecast a reading of 20.2.
Looking ahead, leading economic indicators for September are due at 10 a.m.
What are other assets doing?
European stocks were lower, with Spain's IBEX 35 index losing as much as 1% as the Spain-Catalonia standoff continued.
In Asia , the Shanghai Composite lost 0.3%.
Oil prices fell sharply. West Texas Intermediate crude dropped 85 cents, or 1.3%, to $51.58 a barrel.
Gold futures rose slightly, up 0.3%, to $1,287.00 a troy ounce, while the ICE U.S. Dollar Index edged lower. The euro was trading higher against the dollar at $1.1832.
Barbara Kollmeyer contributed to this article.
(END) Dow Jones Newswires
October 19, 2017 09:53 ET (13:53 GMT)