By David Hodari and Akane Otani
Stocks mostly rebounded from sharp losses Tuesday, as worries
about global economic growth and downbeat earnings outlooks from
bellwether U.S. companies rippled across markets from New York to
China.
Major indexes slumped right after the opening bell, sending the
Dow Jones Industrial Average sliding nearly 550 points and putting
the Nasdaq Composite on track to close in correction territory.
Stocks then pared much of their declines over the rest of the
trading day, with the Dow industrials down 0.3%, the S&P 500
off 0.4% and the Nasdaq down 0.3% heading into the final hour of
the session.
The back-and-forth in markets added to the recent volatile
streak for global stocks. Major indexes in Shanghai, Japan and Hong
Kong tumbled Tuesday after Chinese officials moved to ramp up
financing for private firms, the latest step they have taken to try
to stabilize the country's financial markets and reverse slowing
growth.
Tepid outlooks from industrial giants 3M and Caterpillar added
to the dark mood Tuesday, although major indexes bounced off their
lows after Caterpillar officials said tariffs would have a "quite
minor" impact on its results. Earlier, the company had said it
would have to raise prices for most of its machines and engines
next year to offset rising materials costs as well as tariffs.
Altogether, investors were left with an increasingly muted
outlook for the global economy, which has shown signs of sputtering
this year after a synchronized expansion last year drove stocks
around the world higher. The International Monetary Fund, citing
headwinds from protectionist trade policies and instability in
emerging markets, earlier in October cut its forecasts for global
economic growth for 2018 and 2019.
Even the U.S., which many investors have regarded with more
optimism, has shown signs of faltering. Data have indicated some
weakness in the housing and auto markets, and a report Friday is
expected to show economic growth moderating in the third
quarter.
Investors have a "glass half-empty" perspective on the current
earnings season, said Ronan Carr, equities strategist at Bank of
America Merrill Lynch. "Globally, results haven't been bad, but the
companies that miss are getting hammered, and even the ones that
beat expectations have been underperforming in the 24 hours after
publishing."
As stocks around the world reared back, investors poured money
into government bonds and other assets that tend to perform well
during volatile stretches.
The yield on the benchmark 10-year U.S. Treasury note was at
3.162%, down from 3.196% Monday. Yields fall as bond prices rise.
Gold for October delivery jumped 1% to $1,233.40 a troy ounce,
ending at its highest level since July.
Technology shares resumed a recent slide. Shares of fast-growing
companies disrupting industries ranging from communications to
entertainment had powered much of the stock market's gains in the
first half of the year. Yet in recent months, investors have
questioned whether the rally had left shares overextended.
That has sent shares of many technology-driven firms tumbling,
with Amazon down 0.9% and Nvidia losing 3.9% on Tuesday.
The tech rout also hit Europe, where Austrian semiconductor
manufacturer AMS's earnings disappointed investors. The Stoxx
Europe 600 fell 1.6%, notching its fifth consecutive daily
decline.
Global markets were also pressured by sliding oil prices, which
headed for their steepest one-day drop of the month.
U.S. crude oil slumped 4% to $66.56 a barrel, with some analysts
attributing the declines to fears about rising supply and others
saying the selloff was part of a broader retreat from risky assets
that had performed well earlier in the year.
"It's hard to really get out there and find a bullish situation
here," said Bob Yawger, director of the futures division at Mizuho
Securities U.S.A.
Downbeat U.S. and European trading followed heavy selling in the
Asia-Pacific region, where investors reversed the broader market
rally that came on Friday and Monday amid anxieties about Chinese
economic growth.
Indexes across the region suffered heavy losses, with the main
benchmarks in Shanghai, Japan, South Korea and Taiwan slumping 2%
or more.
The steep fall in Chinese stocks marked a reversal of the
Shanghai index's sharpest two-day rise since 2015, which came as
investors parsed reassuring comments by government and central-bank
officials about Chinese economic growth.
Coming after government proposals to cut income taxes, analysts
are uncertain whether such moves would prevent Chinese growth from
decelerating further.
"We're asking whether China is doing stimulus by a thousand
cuts, but I'm still very skeptical," said Ian Samson, markets
research analyst at Fidelity International. "The ongoing slowdown
is quite natural, but it will continue to weigh on global
growth."
Stephanie Yang contributed to this article.
Write to David Hodari at David.Hodari@dowjones.com and Akane
Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
October 23, 2018 15:49 ET (19:49 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.