Wall Street Can't Keep Gains as Traders Eye China, Earnings


U.S. equity markets shed early gains on Tuesday after weak data out of China sent global sentiment lower, and investors in America awaited the start of bank earnings.

The Dow Jones Industrial Average was 49 points lower, or 0.29% to 17081. The S&P 500 shed 13 points, or 0.68% to 2003, while the Nasdaq Composite declined 42 points, or 0.87% to 4796.

Health care and industrials led the S&P sectors in decline.

Today’s Markets

China again topped the list of market concerns after fresh trade data from overnight disappointed investors. The nation’s exports declined 1% from the year prior, but imports, which fell 17.7%, was what really caused traders to worry. The decline allowed for an approximately $59.4 billion trade surplus for China.

“Disappointing Chinese imports readings highlighted the economic slowdown in the country,” David Madden, IG market analyst said. “Natural resource stocks were the worst hit by the Chinese trade figures, and as imports have declined for eleven-consecutive months, it paints a very clear picture that the second-largest economy in the world isn’t as hungry for commodities as it once was.”

The data put pressure on European equity markets: The Euro Stoxx 50, which tracks large-cap companies in the eurozone declined 0.76%. The German Dax fell 0.80%, while the French CAC 40 was 0.96% lower, and the UK’s FTSE 100 shed 0.36%.

A slew of corporate news was also the focus for traders as third-quarter earnings season was underway. Ahead of the bell, Johnson & Johnson (NYSE:JNJ) revealed mixed results of $1.20 profits per share on revenue of $17.10 billion. Analysts had forecast earnings per share of $1.49 on sales of $17.10 billion. Shares of the company declined more than 1% in recent action.

JPMorgan Chase (NYSE:JPM) took the wraps off its third-quarter results after the closing bell. The nation’s biggest bank by assets reported earnings of $1.32 per share on revenue of $23.5 billion. That missed Wall Street estimates of $1.37 per share and $23.69 billion. JPMorgan, which generally reports its earnings at 7 a.m., said the decision to change the reporting time was “to avoid conflict with another major financial institution” also reporting results on Wednesday. Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) are expected to release their earnings report cards ahead of the bell on Wednesday.

Speaking of JPMorgan, Jes Staley, a former executive of the bank and current managing partner at BlueMountain Capital Management is reportedly expected to be named as Barclays next chief executive. Sources first told the Financial Times an appointment could come “within the next couple of weeks,” and is subject to regulatory approval.

Barclays issued a statement on Tuesday amid the furor in the press, saying “The process of appointing a new Group Chief Executive Officer has not yet concluded and Barclays will provide a further update once that is complete.”

Twitter (NYSE:TWTR) shares popped after the company announced it will slash 336 employees, or 8% of its workforce. The move comes after media speculation of looming jobs cuts after co-founder Jack Dorsey returned to the company as CEO. The social-media giant said the move was part of a plan to “reorganize around the company’s top product priorities and drive efficiencies.” Twitter added its third-quarter revenue should come in at or above its forecasted range of $545 million to $560 million.

After four rebuffed buyout attempts, Anheuser-Busch InBev, the world’s biggest brewer (NYSE:BUD) struck a deal with SABMiller, its smaller rival, for $104.4 billion cash and stock. Should the deal go through, it would be among the top five biggest mergers in corporate history and the biggest takeover of a UK company. Shares of the two brewing giants jumped following the announcement.

Meanwhile, in commodities trading, global crude oil prices bounced between gains and losses after dropping 5% in the previous session after OPEC said it expects demand for its oil to be much higher than previously anticipated. That would continue to put increased pressure on the U.S. shale producers, and could keep prices low.

However, the International Energy Agency said it expects demand to slow as OPEC maintains their output, resulting in a persisting supply glut through 2016.

U.S. crude settled 0.9% lower on Tuesday to $46.66 a barrel. Brent crude, the international benchmark was 1.3% lower to $49.59 a barrel.

Metals were mixed: Gold prices rose 0.10% to $1,165 a troy ounce, while silver gained about 0.35% to $15.92 an ounce. Copper dropped 1.14% to $2.39 a pound.

No key economic data releases were expected, though St. Louis Fed President said monetary policy is “extreme” when taking into consideration the economy’s performance now.  In light of the speech, investors awaited the Wednesday release of the central bank’s anecdotal Beige Book report, which details economic conditions in each of the 12 districts, for clues about when rates might begin to move higher.

In recent action, the yield on the benchmark 10-year U.S. Treasury bond was 0.035 percentage point lower to 2.06%. Meanwhile, the U.S. dollar was mixed against a basket of global currencies, while the euro added 0.23% against the greenback.