Monday October 15th

15-10-2018

Dow futures turn positive, paring earlier losses as stocks try to recover from last week's steep drop

U.S. stock-index futures pared steep losses on Monday mornings as Wall Street tried to recover from a 4 percent drop in the major indexes last week. Dow Jones Industrial Average futures turned positive at around 7:50 a.m. ET, while futures on the S&P 500 and Nasdaq 100 were also off their lows. The Dow finished almost 300 points higher on Friday but stocks still registered steep losses for the week as investors fretted over rising interest rates. The Dow and S&P 500 finished the previous trading week down more than 4 percent, while the Nasdaq posted a 3.7 percent weekly loss. Investors blamed rapidly rising interest rates, concerns about technology stock valuations and a possible slowdown in the global economy for the selling. The 10-year Treasury yield hit a seven-year high of 3.26 percent last week. In Monday's premarket trading, Amazon shares rose 0.7 percent while Goldman Sachs rose marginally. Netflix's stock, however, slipped 0.2 percent after Raymond James cut its price target on the video-streaming giant. Earnings season kicks into high gear this week with Netflix, Morgan Stanley, Johnson & Johnson, Procter & Gamble and Honeywell reporting. Investors are hoping some strong results will stave off the selling, but company outlooks could reinforce current concerns about rising rates and a slowing global economy due to tariffs. Bank of America reported better-than-expected earnings and revenue on Monday, sending its stock up by 1.2 percent. Charles Schwab was also expected to report earnings later in the morning. U.S. retail sales barely rose in September as a rebound in motor vehicle purchases was offset by the biggest drop in spending at restaurants and bars in nearly two years. The Commerce Department said on Monday retail sales edged up 0.1 percent last month after a similar gain in August. Economists polled by Reuters had forecast retail sales increasing 0.6 percent in September. Retail sales in September rose 4.7 percent from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.5 percent last month. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Later in the session, Empire State Manufacturing Index data for October and business inventories data for August are both set to be released at around 10 a.m. Stocks in Asia slipped on Monday afternoon as investors remained cautious, following global losses in the previous week. In the Greater China region, the Hang Seng index in Hong Kong fell by around 1.32 percent as of 3:31 a.m. The Shanghai composite also slipped by 1.49 percent to close at around 2,568.10 — its lowest since November 2014 — while the Shenzhen composite declined by 1.178 percent to end the trading day at about 1,281.08. The moves in China came as new reserve requirements for lenders went into effect, in a move by the People's Bank of China which is expected to inject 750 billion yuan (around $108.4 billion) into the banking system. In Japan, the Nikkei 225 fell by 1.87 percent to close at 22,271.30, while the Topix index slipped by 1.59 percent at 1,675.44, with most sectors ending the trading day lower. Meanwhile, South Korea's Kospi also saw losses of 0.77 percent to close at 2,145.12. Crude oil futures rose on Monday as geopolitical tensions over the disappearance of a prominent Saudi journalist stoked worries about supply, although concerns about the long-term outlook for demand dragged on prices. Crude markets were also supported in the wake of data that showed South Korea did not import any oil from Iran in September for the first time in six years, before U.S. sanctions against the Middle Eastern country take effect in November. Brent crude had risen $1.01, or 1.26 percent, to 81.44 a barrel by 0424 GMT, on track for its biggest daily gain since Oct. 9. U.S. crude futures climbed 80 cents, or 1.12 percent, to $72.14 a barrel, extending gains they racked up on Friday after hefty losses on Wednesday and Thursday. Gold prices rose on Monday as Asian shares resumed their fall and investors grappled with the impact of the ongoing Sino-U.S. trade war and higher U.S. interest rates. Spot gold was up 0.4 percent at $1,222.0 an ounce at 0417 GMT, and not far off last week's two-month high of $1,226.70. U.S. gold futures were up 0.2 percent at $1,225.60 an ounce.