US Markets

Wall Street treads water as earnings counter China data gloom; J&J falls

Credit: REUTERS/BRENDAN MCDERMID

Wall Street struggled for direction on Friday as upbeat earnings reports calmed nerves about the global economy after China expanded at its weakest pace in almost 30 years, with Johnson & Johnson also weighing on the blue-chip Dow index.

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Coca-Cola rises on better-than-expected revenue

J&J slips on move to recall a batch of baby powder

Schlumberger gains on upbeat profit report

China's GDP growth grinds to near three-decade low

Dow off 0.10%, S&P 500 flat, Nasdaq down 0.08%

Updates to open

By Shreyashi Sanyal

Oct 18 (Reuters) - Wall Street struggled for direction on Friday as upbeat earnings reports calmed nerves about the global economy after China expanded at its weakest pace in almost 30 years, with Johnson & Johnson also weighing on the blue-chip Dow index.

Investors are closely tracking the health of the world's second-largest economy as the bitter trade war with the United States fuels fears about a global recession.

While global equities fell on the third-quarter data, a raft of robust earnings from Coca-Cola Co KO.N and Schlumberger NV SLB.N lifted the mood.

Coca-Cola Co KO.N shares gained 1.7% after the beverage maker beat analysts' expectations for quarterly sales.

The company was the top boost to the consumer staples sector .SPLRCS, which rose 0.4%, the most among the 11 major S&P sectors.

Credit card issuer American Express Co AXP.N and oilfield services provider Schlumberger SLB.N reported better-than-expected profits. While Schlumberger shares gained 3.3%, AmEx reversed early gains to trade down 1.6%.

"The move is a mix of a lot of things which aren't all that negative or all that positive. It will be a quiet day, mainly driven by some earnings reports," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

Johnson & Johnson JNJ.N slipped 3.5% and pressured the Dow Jones Industrial Average .DJI the most.

The healthcare conglomerate said it would recall a single lot of its baby powder in the United States after the Food and Drug Administration found trace amounts of asbestos in samples taken from a bottle purchased online.

Still, the S&P 500 .SPX and Dow indexes were on pace to post their second straight week of gains, while the Nasdaq .IXIC was set to rise for the third week in a row, as the earnings season kicked off on a strong note.

Analysts still expect third-quarter S&P 500 earnings to have fallen by 2.9%, according to Refinitiv data, the first contraction since mid-2016.

"The pessimism around the onset of earnings season was too strong but because of that, there is plenty of room for companies to outperform," Frederick added.

At 9:59 a.m. ET, the Dow Jones Industrial Average was down 26.87 points, or 0.10%, at 26,999.01, while the S&P 500 .SPX was down 0.06 points, or -0.00%, at 2,997.89. The Nasdaq Composite was down 6.90 points, or 0.08%, at 8,149.96.

Department store stores and other apparel retailers took a hit after Credit Suisse said weak third-quarter retail trends could continue into fall and holiday season.

The brokerage downgraded shares of Macy's M.N, Gap Inc GPS.N and L Brands LB.N to "underperform", pushing their shares down 3.5% and 7%. Nordstrom JWN.N, Kohl's Corp KSS.N and Hanesbrands HBI.N also fell between 1% and 5%.

The retail index .SPXRT dipped 0.1%.

Shares of E*Trade Financial Corp ETFC.O rose 5.8% after the online broker posted better-than-expected quarterly profit and revenue.

Advancing issues outnumbered decliners by a 1.00-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.16-to-1 ratio on the Nasdaq.

The S&P index recorded 15 new 52-week highs and no new low, while the Nasdaq recorded 27 new highs and 15 new lows.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila)

((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780))

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

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