US Markets

GLOBAL MARKETS-Trade, earnings worry drag on stocks; U.S. Treasury yields fall


A gauge of global equities retreated for a second straight session and U.S. Treasury yields fell as simmering trade concerns gained steam and the pace of the U.S. corporate earnings season picked up.

By Chuck Mikolajczak

NEW YORK, July 17 (Reuters) - A gauge of global equities retreated for a second straight session and U.S. Treasury yields fell as simmering trade concerns gained steam and the pace of the U.S. corporate earnings season picked up.

On Wall Street, CSX Corp CSX.O was one of the biggest drags on the benchmark S&P 500 index. The railroad tumbled 10.27% after it reported quarterly earnings that missed expectations and cut its full-year revenue forecast on weakness in its trade-related intermodal business. Fellow railroad Union Pacific UNP.N lost 6.34% while Berkshire Hathaway BRKb.N, which owns railroad Burlington Northern Santa Fe, saw its Class B shares fall 2.55%.

The results come after U.S. President Donald Trump renewed his threat to tax another $325 billion of Chinese goods on Tuesday, which weighed on stocks. In addition, the U.S. could also face Chinese sanctions, following a World Trade Organization ruling on Tuesday, further complicating trade talks between the two countries.

"None of the underlying issues have really been put to bed," said Ed Campbell, portfolio manager and managing director at QMA in Newark, New Jersey, regarding trade concerns. "It's a risk factor that could come back at any time."

U.S. stocks have also eased over the past two sessions in part due to a sluggish start to the quarterly earnings season. Those declines also follow a rally that sent key stock averages to record peaks on expectations for lower U.S. rates.

Big banks such as Citi C.N, JPMorgan JPM.N and Wells Fargo WFC.N have recorded drops in net interest margins, a sign low interest rates are hurting their bottomlines.

Bank of America BAC.N shares were up 0.7% after it reported results on Wednesday but lowered its annual net interest income guidance.

While it is still early in what is expected to be a lackluster reporting season, the earnings growth rate for the second quarter now stands at 0.4%, according to Refinitiv data. Expectations were recently calling for a quarterly decline in S&P 500 results.

The Dow Jones Industrial Average .DJI fell 115.64 points, or 0.42%, to 27,219.99, the S&P 500 .SPX lost 19.63 points, or 0.65%, to 2,984.41 and the Nasdaq Composite .IXIC dropped 37.59 points, or 0.46%, to 8,185.21.

European shares closed lower as weakness in Swedish shares on some disappointing quarterly results and a decline in shares of oil majors helped snap a three-day winning streak.

The pan-European STOXX 600 index .STOXX lost 0.37% and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.45%.

Along with the trade concerns, U.S. Treasury yields moved lower after data showed weakness in the housing market for a second straight month, even as mortgage rates have declined.

"The housing starts were a little weaker but the building permits were definitely significantly weaker," said Justin Lederer, an interest rates strategist at Cantor Fitzgerald in New York.

Benchmark 10-year notes US10YT=RR last rose 20/32 in price to yield 2.052%, from 2.12% late on Tuesday.

The dollar retreated after notching strong gains on Tuesday following better-than-expected monthly retail sales data, while pound bounced after touching a 27-month low versus the greenback as no-deal Brexit concerns mounted.

The dollar index .DXY fell 0.18%, with the euro EUR= up 0.12% to $1.1223. Sterling GBP= was last trading at $1.2434, up 0.25% on the day.

Housing starts, building permits Image

Global assets in 2019

Global currencies vs. dollar

MSCI All Country Wolrd Index Market Cap

(Additional reporting by Karen Brettell and April Joyner in New York; Editing by Bernadette Baum and Susan Thomas)

((; @ChuckMik; 1 646 223 5234;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos


    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at and via Reuters TV.

    Learn More