Stocks caught between corporate struggles, strong China GDP

By StocksFOXBusiness

The global uncertainties facing the financial sector

AlixPartners CEO Simon Freakley on the state of the financial sector and the impact from uncertainties such as the U.S. trade talks with China and the future of Brexit.

U.S. stocks fell Wednesday as struggles in the tech and health care sectors offset the effect of a stronger-than-expected report from China on its first-quarter economic growth.

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The Chinese data indicated gross domestic product growth held steady at 6.4 percent in the first quarter as manufacturing picked up significantly amid signs authorities worked forcefully to stabilize business.

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Offsetting the effect of that report, however, were tech and health care company developments. Netflix shares struggled, weighing on the Nasdaq Composite. While quarterly earnings for the streaming service grew by double-digit percentage points in the first quarter of 2019, the streaming giant forecast a weaker second quarter and the pace of new U.S. subscribers slowed.

Netflix has been under pressure as a slew of new streaming video sites seek to challenge the company's dominance in the industry, also putting more importance on growth outside of the U.S.

Despite Netflex shares weakness, the Nasdaq 100 index hit an intraday all-time high. If it closes above 7,660.18 it will be a record closing high as well. The Nasdaq 100 tracks the 100 largest non-financial stocks in the Nasdaq Composite and is the basis for Nasdaq futures.

TickerSecurityLastChange%Chg
QCOMQUALCOMM INC.73.52-3.63-4.71%
NFLXNETFLIX INC.291.44-5.49-1.85%
IBMINTERNATIONAL BUSINESS MACHINES CORP.129.57-4.75-3.54%
ATVIACTIVISION BLIZZARD INC.47.33-1.75-3.57%

The Nasdaq Composite was approximately 1 percent below its record close of 8,109.69 on Aug. 29.

A number of Wall Street analysts upgraded their ratings on Qualcomm stock and boosted their price target for the shares after the chipmaker settled its long-running royalty fight with Apple.

As part of the agreement, Qualcomm will receive a payment from Apple, the pair of companies said Tuesdady, sending shares of the chipmaker rocketing more than 23 percent higher shortly after the announcement. Investors extended those gains Wednesday.

The Dow Jones Industrial Average slipped on falling shares of UnitedHealth and IBM, which missed its revenue target in the recently completed quarter.

Health care company shares burdened equity averages. UnitedHealth stock continued getting slammed on worries about the Democrats’ Medicare for All bill. Health insurer and hospital stocks were also under pressure from a Trump administration proposal that would change the system of rebates paid by drug makers to pharmacy benefit managers.

TickerSecurityLastChange%Chg
UNHUNITEDHEALTH GROUP INCORPORATED230.66-2.28-0.98%
CAHCARDINAL HEALTH42.79-0.97-2.22%
CVSCVS HEALTH CORPORATION60.24-1.81-2.92%
ABCAMERISOURCEBERGEN CORPORATION83.54-2.01-2.35%

Wall Street was buoyed by Morgan Stanley's first-quarter report, which topped analyst expectations.

“We delivered solid earnings despite a slow start to the year following the turbulent markets in the fourth quarter. With an ROE of 13.1 percent and ROTCE of 14.9 percent, our results demonstrated the stability and breadth of our global franchise," CEO James Gorman said in a statement.

TickerSecurityLastChange%Chg
MSMORGAN STANLEY39.33-0.94-2.33%

"Even though risks to the global environment remain, markets have recovered and we are well positioned to serve our clients and invest in our businesses.”

The Dow Jones Transportation Index soared, as CSX, United Continental Holdings and Kansas City Southern led the sector higher.

TickerSecurityLastChange%Chg
CSXCSX CORP.64.62-1.52-2.30%
UALUNITED AIRLINES HLDG.82.53-3.03-3.54%
KSUKANSAS CITY STHN119.50-3.70-3.00%

Crude oil prices, which have risen the last two days, slipped fractionally to $63.74. A surprise drop in oil inventories reported late Tuesday by the American Petroleum Institute plus strength in the Chinese economy have been supporting prices.

Refinery throughput in China, the world's second-largest user of crude oil, rose 3.2 percent in March from a year earlier, according to Reuters.

TickerSecurityLastChange%Chg
I:DJIDOW JONES AVERAGES25628.9-623.34-2.37%
SP500S&P 5002847.11-75.84-2.59%
I:COMPNASDAQ COMPOSITE INDEX7751.765644-239.62-3.00%

Meantime, output cuts by OPEC, Russia and others, plus U.S. sanctions on Venezuela and Iran, continue to tighten supplies.

The yield on the 10-year Treasury slipped to 2.59 percent. A Bank of America survey of fund managers released Tuesday found that 86 percent do not think the recent inversion of the U.S. Treasury yield does not signal a recession.

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China’s Shanghai Composite closed up 0.29 percent, the Hang Seng was off 0.02 percent and Japan’s Nikkei 225 added 0.25 percent.

Britain’s FTSE 100 was off  0.11 percent, France’s CAC 40 added 0.27 percent and Germany’s DAX gained 0.29 percent.

The Associated Press contributed to this report.