By Barbara Kollmeyer, MarketWatch , Anneken Tappe
Bank of America earnings beat expectations
Stocks put in a mixed performance out of the gate Monday
morning, as investors continue to assess the fallout of last week's
equity-market rout, sparked in part by rising U.S. interest
rates.
Despite better-than-expected earnings from Bank of America, the
Charlotte-based bank also reported flat loan growth, while retail
sales figures released Monday by the Commerce Department fell well
below Wall Street expectations.
Need to know:Don't rule out $400 oil if U.S. sanctions Saudi
Arabia
(http://www.marketwatch.com/story/call-of-the-day-dont-rule-out-400-oil-if-the-us-sanctions-saudi-arabia-2018-10-15)
How are major benchmarks trading?
The Dow Jones Industrial Average rose 6 points, or 0.2%, to
25,352, while the S&P 500 fell 5.2 points, or 0.2%, to
2,765.50. The Nasdaq Composite fell 48 points, or 0.7%, to
7,447.11.
On Friday, the Dow Jones Industrial Average finished the day up
287.16 points, or 1.2%, to 25,339.99, in whipsaw trading. The
S&P 500 rose 1.4% to 2,767.13, snapping a six-day losing streak
that marked its longest such streak since a nine-day drop that
ended in November 2016. The Nasdaq Composite Index rose 2.3%, in
its best daily performance since March 26.
But for the week, the Dow fell 4.2%, the S&P lost 4.1% and
the Nasdaq shed 3.7%, representing their worst weekly performances
since March.
Read:Here's how much damage has been done to the stock market
during a powerful rout
(http://www.marketwatch.com/story/heres-how-much-damage-has-been-done-to-the-stock-market-during-a-powerful-rout-2018-10-11)
What's driving the market?
Investors remain spooked after last week's two-day selloff that
at its worst wiped 1,400 points off the Dow, and pushed the Nasdaq
toward correction territory. Losses were tied to jitters over a
sudden rise in interest rates, as the yield on the 10-year Treasury
note hit a seven-year high above 3.25% last week. That yield was
hovering at 3.15% on Monday.
Higher yields raise borrowing costs for corporations and lure
investors away from perceived riskier asset such as stocks. Yields
move inversely to price.
Seen as a major driver for stocks in the coming week,
third-quarter earnings season gets under way in earnest this week,
with Goldman Sachs Group Inc.(GS) among the big bank names
reporting, while streaming video group Netflix Inc.(NFLX) will also
be a highlight.
Netflix earnings:Was the streaming giant's second-quarter miss
really just a blip?
(http://www.marketwatch.com/story/netflix-earnings-was-the-streaming-giants-second-quarter-miss-really-just-a-blip-2018-10-11)
Geopolitical tensions were another worry for investors, starting
with Saudi Arabia, which is locked in a growing diplomatic spat
with the U.S. On Sunday, President Donald Trump threatened "severe
punishment" for the Saudis if any connection was found between the
kingdom and a missing dissident journalist. That country responded
with an immediate threat to retaliate, sparking a rally for oil
prices, though gains have since pared.
Saudi backlash:GM, J.P. Morgan the latest to drop out of Riyadh
conference, but Mnuchin still plans to attend
(http://www.marketwatch.com/story/saudi-backlash-ford-chairman-latest-to-drop-out-of-riyadh-conference-but-mnuchin-still-plans-to-attend-2018-10-14)
Need to know:Don't rule out $400 oil if U.S. sanctions Saudi
Arabia
(http://www.marketwatch.com/story/call-of-the-day-dont-rule-out-400-oil-if-the-us-sanctions-saudi-arabia-2018-10-15)
Trump made those comments in a "60 Minutes" interview
(http://www.marketwatch.com/story/from-climate-change-to-china-to-kavanaugh-heres-what-trump-told-60-minutes-2018-10-14)
where he also said the U.S. could slap a third round of tariffs on
China, which he said doesn't "have enough ammunition to
retaliate."
On Monday, Trump tweeted on the subject, saying he had spoken to
Saudi Arabia's King Salman, who denied any knowledge of what
happened to the journalist, and that he would be sending Secretary
of State Mike Pompeo to the country to meet with the king.
(https://twitter.com/realDonaldTrump/status/1051814214212485120)
And concerns resurfaced over a no-deal Brexit after the U.K. and
the European Union failed to find a compromise
(http://www.marketwatch.com/story/brexit-talks-face-setback-just-days-ahead-of-key-summit-2018-10-14)on
the issue of the Irish border. Both sides were hoping a deal on a
withdrawal agreement would be mostly settled ahead of an EU summit
starting Wednesday.
Need to know:Don't rule out $400 oil if U.S. sanctions Saudi
Arabia
(http://www.marketwatch.com/story/call-of-the-day-dont-rule-out-400-oil-if-the-us-sanctions-saudi-arabia-2018-10-15)
What data are on tap?
U.S. retail sales rose 0.1% in September, less than expected.
Excluding car sales, the figure remained flat last month.
The Empire State Index meanwhile rose 2.1 points to 21.1 in
October, compared with 19 previously. Business inventories for
August conclude the data releases for Monday at 10 a.m.
Eastern.
What are analysts saying?
Investors need two things to keep buying the dips in the stock
market, said Hussein Sayed, chief market strategist at FXTM, in a
note to clients.
"One, which is the most important, is corporate profits must
remain robust and beat the 20% earnings growth projected for the
third quarter while painting a rosy outlook for the quarters to
come. Two, the U.S. and China need to cut a deal on trade, said
Sayed. "If those two criteria aren't met, then stocks might have
already peaked for 2018."
What stocks are in focus?
Bank of America Corp.(BAC) reported third quarter results that
beat expectations
(http://www.marketwatch.com/story/bank-of-america-profit-and-revenue-top-estimates-2018-10-15)
ahead of the New York market open, showing earnings per share of 66
cents versus the consensus expectations of 62 cents. Charles Schwab
Corp.(SCHW) is also due to report earnings ahead of the open on
Monday.
Sears Holdings Corp.(SHLD)filed early Monday for bankruptcy
protection
(http://www.marketwatch.com/story/sears-files-for-chapter-11-bankruptcy-in-attempt-to-keep-stores-open-for-now-2018-10-15)
from creditors. The chapter 11 filing comes after the retailer
reached a deal with lenders that will allow it to keep hundreds of
stores open for now.
Billionaire investor Carl Icahn on Monday disclosed he had
boosted his stake
(http://www.marketwatch.com/story/carl-icahn-to-oppose-dells-purchase-of-dvmt-tracking-shares-2018-10-15-61034053)
in shares that track Dell Technologies Inc.'s(DVMT) interest in
VMware Inc.(VMW) to 8.3%. In a letter, he said he plans to vote
against Dell Technologies' plan to buy the stock.
How are other markets trading?
Shares in Asia finished lower, failing to pick up the baton from
the U.S. on Friday, led by a 1.9% drop for the Nikkei 225 index .
Major European indexes were weaker across the board.
Crude-oil prices remained higher on U.S.-Saudi tensions
(http://www.marketwatch.com/story/crude-prices-rise-on-growing-ussaudi-tensions-2018-10-15),
while gold climbed 0.9%. The U.S. dollar index was down 0.2%.
(END) Dow Jones Newswires
October 15, 2018 10:07 ET (14:07 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.