Stocks Drop With Caterpillar, Nvidia Earnings Woes: Markets Wrap

(Bloomberg) -- U.S. stocks fell after Caterpillar and Nvidia blamed slowing global growth for disappointing results, augmenting concern the trade war with China is hitting corporate profits. Oil slid.

The S&P 500 halted a three-day rally to start a week packed with events that could move markets, with the sector bellwethers dousing enthusiasm over the young earnings season. The Dow Jones Industrial Average dropped 210 points, with all but six of its 30 members in the red. Caterpillar sank 9.1 percent after pinning its biggest quarterly profit miss in a decade on weak demand from China. Nvidia plunged 14 percent after slashing its revenue forecast. AMD tumbled 8 percent.

“When you see the big cyclical companies missing earnings or missing forecasts, it worries the market because it confirms what they’ve already been hearing from the macro side,” Dave Lafferty, chief market strategist at Natixis Investment Managers, said in an interview at Bloomberg’s New York headquarters. “Everyone knows the world is decelerating, they’re just waiting to see if the corporate earnings confirm that.”

The disappointing results come amid a busy week for American corporate reports, highlighted by Microsoft, Apple and 10 other Dow components. Investors will also grapple with trade negotiations, amid a report Monday that U.S. prosecutors are planning to file criminal charges related to China’s largest smartphone maker. A Federal Reserve policy decision and Brexit votes also loom, while the U.S. stepped up pressure on Venezuela’s Nicolas Maduro by announcing sanctions on PDVSA. To cap it all, a flurry of American economic figures including GDP and jobs data are also set for release.

European equities fell, though miners bucked the decline as iron ore jumped following a deadly dam collapse at a mine in Brazil. Earlier in Asia, Japanese and Chinese shares retreated, while stocks in Hong Kong pared gains to close little changed. The yuan appreciated to its strongest against the dollar since July before Vice Premier Liu He travels to Washington for trade talks, and as the People’s Bank of China freed up a potential $37 billion for bank lending.

Elsewhere, Bitcoin fell, putting the biggest cryptocurrency on track for its lowest close since December. Emerging-market stocks slipped while their currencies climbed. Gold retreated, and Venezuela bonds extended their rally. Russia’s MOEX stock index touched an intraday record high after sanctions were lifted on Rusal, before reversing gains as oil prices slumped.

Among key events in the coming days:

• Chinese President Xi’s top economic aide, Vice Premier Liu He, will meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday and Thursday.
• Tech giants Apple, Microsoft, Facebook, Alibaba, SAP, Qualcomm, Tesla, Samsung and Sony announce earnings.
• On Tuesday the U.K. Parliament votes on amendments to Theresa May’s Brexit deal with the EU. The EU Parliament debates Brexit on Wednesday.
• Wednesday Fed Chairman Jerome Powell holds a news conference after the FOMC rate decision.

These are the main moves in markets:

Stocks

• The S&P 500 fell 0.8 percent as of 4 p.m. New York time.
• The Nasdaq 100 Index lost 1.3 percent.
• The Stoxx Europe 600 Index declined 1 percent.
• The MSCI Asia Pacific Index decreased 0.2 percent.
• The MSCI Emerging Market Index dipped 0.4 percent.

Currencies

• The Bloomberg Dollar Spot Index climbed less than 0.1 percent.
• The euro increased 0.2 percent to $1.1433.
• The British pound declined 0.3 percent to $1.3158.
• The Japanese yen gained 0.2 percent to 109.29 per dollar.

Bonds

• The yield on 10-year Treasuries decreased two basis points to 2.74 percent.
• The two-year rate was little changed at 2.61 percent.
• Germany’s 10-year yield gained two basis points to 0.21 percent.

Commodities

• West Texas Intermediate oil futures fell 3.7 percent to $51.72 a barrel.
• Gold futures rose 0.3 percent to $1,307.50 an ounce.

--With assistance from Cormac Mullen and Samuel Potter.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net;Reade Pickert in New York at epickert@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Todd White

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