Stocks slide as slow growth in China weighs on earnings

Daniel Fowler
January 30, 2019

At 9:56 a.m. ET the Dow Jones Industrial Average was down 371.95 points, or 1.50 percent, at 24,365.25, the S&P 500 was down 34.96 points, or 1.31 percent, at 2,629.80 and the Nasdaq Composite was down 123.76 points, or 1.73 percent, at 7,041.11. Caterpillar shares fell more than 5 per cent in pre-market trading, which would be the biggest decline this year. S&P 500 e-minis were down 13 points, or 0.49 percent and Nasdaq 100 e-minis were down 36.75 points, or 0.54 percent.

The Deerfield, Illinois-based company also issued a 2019 profit forecast range which, at the low end, was below the average of analysts' expectations, adding to worries over mounting trade tensions that pummelled the heavy-equipment maker's shares a year ago.

The S&P 500 index fell 29 points, or 1.1 per cent, to 2,635.

The treatment of restructuring costs by industrial companies has been a matter of hot debate lately, given the extent to which the exclusion of these expenses can distort earnings.

The South Korean company has been losing share for its smartphones for years in China, but the slowdown there is now threatening to hurt its crucial chips business.

Stocks are moving broadly lower on Wall Street as traders worry about the impact on US companies of a slowdown in China's economy. Advanced Micro Devices Inc, due to report Tuesday, gets about a third of its revenue from China, based on Refinitiv's data, while Apple's results also are due Tuesday. However, they expect gaps to remain on key problems such as China's blueprint for state-led development of leading technologies. "The chipmaker said 'deteriorating macroeconomic conditions, particularly in China, ' impacted demand for its graphics processing units".

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In the fourth quarter, Caterpillar's revenue increased across all of its regional businesses, with the largest rise in North America, its biggest market by value.

3M rose 3.1 percent to $199.18 at 9:37 a.m.in NY.

"China's growth slowdown could be faster than expected especially if trade tensions continue, and this can trigger abrupt sell-offs in financial and commodity markets" - something that happened when Chinese growth sputtered in 2015, said International Monetary Fund chief economist Gita Gopinath last week. Fear of a potential recession took its toll on the stock market at the end of 2018, and the S&P 500 fell almost 20 percent between setting its record on September 20 and Christmas Eve. Brent crude, used to price global oils, fell 2.8 percent, to $59.93 per barrel. Micron Technology Inc fell 1 percent. NY time. The Nasdaq 100 Index lost 2 per cent.

The price of gold rose 0.4 percent, to $1,303.10 an ounce, silver also rose 0.4 percent, to $15.77 an ounce, and copper fell 1.8 percent, to $2.68 a pound.

The dollar slipped to 109.36 Japanese yen from 109.64 yen late Friday.

Oil prices fell almost 2 percent after USA companies added rigs for the first time this year, a signal that crude output may rise further. The euro rose to $1.1427 from $1.1414, and the British pound dipped to $1.3158 from $1.3198.

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