Market

Dow, S&P 500 trade lower as weak China data sets cautious tone

U.S. stock benchmarks traded modestly lower Monday morning, as slower-than-forecast growth in China set off a cautious tone ahead of steady parade of earnings for the week.

How are stock benchmarks trading?

On Friday, after the release of stronger-than-forecast retail sales figures, the Dow Jones Industrial Average rose 382 points, or 1.1%, to 35,295, the S&P 500 increased 33 points, or 0.8%, to 4,471, and the Nasdaq Composite gained 74 points, or 0.5%, to 14,897.

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What’s driving the market?

China reported 4.9% year-over-year growth in the third quarter, a big slowdown from the 7.9% recorded in the second quarter as construction output slowed.

U.K. bond yields
TMBMKGB-02Y,
0.713%

rose after the governor of the Bank of England said the central bank would have to act because of concerns that rising prices will lift medium-term inflation expectations. U.S. central bank officials haven’t been as alarmed by the rise in prices.

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Earnings season kicks into higher gear this week with releases from Netflix
NFLX,
-0.48%
,
Tesla
TSLA,
+2.16%

and International Business Machines
IBM,
+0.03%
,
among others.

“The percent of companies beating expectations on both EPS and revenues has admittedly been tracking a little below last quarter’s levels, but both stats are still extremely strong relatively to history — at 79% for EPS and 82% for sales,” said strategists at RBC Capital Markets led by Lori Calvasina. “Most companies have also highlighted continued strength in underlying demand, something that has enabled investors to look past supply chain pressures (at least to some extent).”

In economic reports, a reading of U.S. industrial output was down 1.3% in September and a reading for August was lowered to a decline of 0.1% from a gain of 0.4%.

Which companies are in focus?
  • Zillow Group IncZ is pausing the purchase of U.S. homes as it works through a backlog of properties, Bloomberg News reported Sunday. Shares were down 10%.

  • Square Inc. SQ is contemplating building a system for bitcoin BTCUSD mining, according to Chief Executive Jack Dorsey. The payment platform’s shares were lower. Its stock was down 1.1%.

  • Walmart Inc. WMT announced the return of its “Black Friday Deals for Days” event, taking place during the month of November. Shares were 0.3% lower.

  • Amazon.com Inc. AMZN said Monday that it’s looking for 150,000 seasonal hires, both full- and part-time. Its stock was up 0.3%.

How are other assets trading
  • The 10-year Treasury yield TMUBMUSD10Y rose almost 4 basis points to around 1.61%. Yields and debt prices move in opposite directions.

  • Oil futures traded higher, with the U.S. benchmark CL00 rising 1.3% to around $82.71 a barrel. Gold futures GC00 traded lower Friday, falling 0.2% to reach $1,765.30 an ounce.

  • The Stoxx Europe 600 SXXP was down 0.7%, while London’s FTSE 100 UKX retreated 0.6%.

  • The Shanghai Composite SHCOMP closed 0.1% lower, and Japan’s Nikkei 225 NIK declined 0.2%.

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