Tuesday October 29th

29-10-2019

S&P 500 set to slip from record high, Alphabet falls on earnings

U.S. stock index pointed Tuesday to an S&P 500 decline from a record set in the previous session as tech giant Alphabet shares struggled on disappointing earnings. S&P 500 futures pointed to a 0.2% slip at the open. Dow Jones Industrial Average and Nasdaq 100 futures also indicated slight pullbacks. The declines were led by a 1.6% slide in Google-parent Alphabet shares, which fell after the company posted earnings that missed analyst expectations. Alphabet reported a profit of $10.12 per share. Analysts polled by Refinitiv expected earnings per share of $12.42. Guggenheim analyst Michael Morris pointed to rising costs as a source of weakness for the search-engine giant. “Higher personnel spending, particularly for R&D and marketing, was the primary cost driver and we expect investment to continue into 4Q,” he said in a in a note. “While we maintain confidence in Alphabet’s leadership positions (talent, technology and financial resources), we expect bearish concerns toward spending to weigh on near-term sentiment,” Morris added. Other companies reporting earnings included Merck and Pfizer. Merck’s earnings beat expectations, boosted by immunotherapy drug Keytruda. Pfizer’s profit also topped analyst estimates. Both stocks were up around 3% in the premarket. Tuesday’s moves come a day after the S&P 500 posted an all-time high on Monday. Better-than-expected earnings, along with improvements on the U.S.-China trade front, pushed the broad index above its previous record set in July. The S&P 500′s record high extended the second-largest ever bull market to 3,885 days, according to data from Bespoke Investment Group. But while the outlook on U.S.-China trade talks has improved, the conflict has yet to be resolved. The U.S. said Monday evening that it is considering extending certain tariff exclusions on $34 billion of imports from China. Major Asian markets were mixed on Tuesday as investors monitored further developments on the U.S.-China trade front, with the two economic powerhouses working toward a deal. In Japan, the Nikkei 225 rose 0.47% to close at 22,974.13 while the Topix gained 0.86% to finish its trading day at 1,662.68. South Korea’s Kospi closed slightly lower at 2,092.69. The Hang Seng index in Hong Kong reversed earlier gains as it declined 0.39%. Mainland Chinese stocks fell on the day. The Shanghai composite shed 0.87% to about 2,954.18 and the Shenzhen component was 0.57% lower at 9,746.03. The Shenzhen composite also declined 0.938% to approximately 1,642.68. Oil broke below $61 a barrel on Monday, falling for a second day, pressured by expectations for a rise in U.S. crude inventories and fading optimism over a U.S.-China trade deal. U.S. crude inventories are expected to have risen by around 700,000 barrels last week, according to a Reuters poll of analysts. The first of two weekly supply reports, from the American Petroleum Institute, is due at 2030 GMT. Brent crude was down 63 cents at $60.94 a barrel, having fallen 45 cents on Monday. U.S. West Texas Intermediate crude was down 42 cents to $55.39. Gold prices were little changed on Tuesday, hovering around $1,490 an ounce as progress in China-U.S. trade talks sent equities soaring, while anticipation ahead of major central bank meetings in the week provided some support. Spot gold was trading at $1,493.11 per ounce at 0938 GMT, after shedding nearly 1% in the previous session. U.S. gold futures were flat at $1,495.70 an ounce.