US Stock Indexes Drop as Economic, Earnings Worries Rise

AP photo by Richard Drew
In this Tuesday, Jan. 29, 2019, file photo specialist Specialist Glenn Carell, center, and trader John Panin work on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EST on Thursday, Feb. 7.

NEW YORK (AP) — U.S. stock indexes sank in early trading Thursday, following European markets and the price of crude oil lower as pessimism built about the strength of the global economy and upcoming earnings reports.

Sharp drops for Twitter and technology stocks weighed on the S&P 500 index, which broke a five-day winning streak on Wednesday. Twitter gave a better-than-expected earnings report for its latest quarter, but its stock price tumbled after it said revenue for this quarter may fall short of some analysts' estimates.

Twitter's discouraging forecast fed into growing concerns across the market that earnings at U.S. companies will weaken in the first three months of this year.

It's similar to worries about the overall economy. Thursday brought another report showing the U.S. economy is strong, as the Labor Department said fewer Americans sought unemployment benefits last week. That's a sign that the job market remains strong, but many economists expect the U.S. economy to slow this year along with economies around the world. Worries were focused in particular on Europe Thursday.

KEEPING SCORE: The S&P 500 fell 0.8 percent as of 10:08 a.m. Eastern time, and was on pace for its worst day in more than two weeks. The Dow Jones industrial average lost 172 points, or 0.7 percent, to 25,218, and the Nasdaq composite dropped 1 percent.

BLOCKED: Twitter sank 9.9 percent for one of the biggest losses in the S&P 500 after it said its monthly user base fell to 321 million during its latest quarter from 330 million a year earlier. It also said it expects to make $715 million to $775 million in revenue during the current quarter. Analysts are expecting $765 million, according to FactSet.

EARNINGS WORRIES: It's not just Twitter that investors are getting concerned about. Across the S&P 500, analysts are forecasting earnings per share to drop 1.8 percent in the first quarter from a year earlier. They were forecasting growth just a few weeks ago, and if the updated forecasts prove true, it will be the first decline in nearly three years.

Any decline would also be a sharp drop-off from the 12.9 percent growth that S&P 500 companies are expected to report for the quarter of 2018.

OVERSEAS MARKETS: European stock markets were mostly lower after the European Union slashed its forecast for economic growth in the 19 countries that use the euro this year to 1.3 percent from an earlier forecast of 1.9 percent. A weaker-than-expected report on industrial production in Germany also raised concerns.
Asian markets were mixed.

TRADE TALKS: Stocks around the world have heaved up and down recently on concerns about U.S.-China trade tensions. U.S. Treasury Secretary Stephen Mnuchin and trade representative Robert Lighthizer will lead a delegation to Beijing next week for the next round of trade talks, but the issues are complex. These include contentious topics like Beijing's technology policy and trade practices, where progress has been limited so far.

Mnuchin also said that there were no plans for President Donald Trump to meet Chinese leader Xi Jinping. "If there are remaining issues that we can't get closed, I think President Trump expects that he's going to sit down with President Xi and address those issues," he said.

ENERGY: Benchmark U.S. crude oil dropped 1.4 percent, and natural gas sank 1.5 percent. That helped drag energy stocks in the S&P 500 down by 0.9 percent, the third-worst decline among the 11 sectors that make up the index.

 

Source: AP

Categories: Finance, National News, Today’s Business News

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