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Stocks whipsaw as global growth concerns dog investors – MarketWatch

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- Hirdetés -

U.S. stocks were lower midday Wednesday in a volatile day of trading, as investors attempted to shake off data showing a contracting Chinese manufacturing sector, and as a partial U.S. government shutdown entered its 12th day.

- Hirdetés -

Major markets were closed on Tuesday for the New Year holiday.

How are benchmarks trading?

The Dow Jones Industrial Average
DJIA, +0.16%
was down 33.2 points, or 0.1%, to 23,294, the S&P 500 index
SPX, +0.25%
was virtually unchanged at 2,506, and the Nasdaq Composite Index
COMP, +0.59%
rose 16 points, or 0.2%, to 6,650.

At session lows, the Dow was down 399 points, the S&P had fallen as much as 39 points, while the Nasdaq had retreated 128 points. At their peaks, the Dow climbed nearly 18 points, while the S&P was up briefly by 4.79 points and the Nasdaq advanced 27.59 points at its peak.

What’s driving the market?

Investors kicked off the new year with fresh angst, driven by worries over the health of the world’s second-largest economy, China, which has fueled an aversion to assets perceived as risky.

Beijing’s official read of manufacturing for December, released Wednesday, showed a more severe drop than one issued earlier, reflecting a fall to the weakest level since February 2016.

The Caixin manufacturing purchasing managers index fell to 49.7 in December. A reading below 50 signals a contraction in activity, the first in 2 1/2 years.

Meanwhile, growth in Germany’s manufacturing sector also slowed, according to Markit’s purchasing manager’s index, which fell to a 33-month low of 51.5, further raising concerns about a global economic slowdown that investors worry could spill over into the U.S.

The economic softness comes as investors are concerned about a protracted tariff dispute between Beijing and Washington, which analysts have said could aggravate a retrenchment in both economies.

Market participants also are watching a partial U.S. government shutdown that is nearing its second week with President Donald Trump inviting top lawmakers to sit down Wednesday afternoon and discuss reopening the government by resolving a dispute over funding for the expansion of the U.S.-Mexico border wall.

On the data front, the final reading of IHS Markit’s U.S. Purchasing Manager’s Index for the month of December, came in at 53.8, versus expectations of 53.9, according to FactSet data.

What are analysts saying?

“In the past, government shutdowns haven’t really affected markets,” Sam Stovall, chief investment strategist for U.S. equities at CFRA Research, told MarketWatch. If Congress and the White House are able to come to an agreement to end the ongoing partial shutdown soon, that should hold true, Stovall predicted.

“But today’s selloff could be attributed to the perceived lack of leadership in Washington,” he said, as the shutdown underscores what could be a year of increased policy uncertainty, including questions surrounding U.S. trade policy.

The post-Christmas “melt-up” markets experienced in recent days is being “unwound a bit,” wrote Joel Kulina, analyst at Wedbush Securities in a note to clients.

“Given global growth concerns and lingering uncertainty from trade/tariff wars, have to think investors will adopt a more cautious approach to 2019 to get a sense of when or where we may find a bottom,” he wrote.

“Markets started 2019 on a defensive note after China’s Caixin manufacturing PMI for December slipped into contractionary territory for the first time since May 2017, reviving fears over a slowdown in the world’s second largest economy,” wrote Charalambos Pissouros, senior market analyst at JFD Brokers, in a research note.

What stocks are in focus?

Netflix Inc.
NFLX, -0.80%
 shares are down 1.2%, after SunTrust Robinson Humphrey analysts cut their price target on the streaming firm from $410 to $355.

See: Netflix is no longer allowing users to pay through Apple’s iTunes

The stock is also in the spotlight after reports that the firm hired away Activision Blizzard Inc.
ATVI, +1.72%
CFO Spencer Neumann. Activision stock is up 1.6% during trade Wednesday.

Also read: Netflix removes satirical show episode in Saudi Arabia after complaint from Riyadh: reports

Tesla Inc.
TSLA, -6.71%
 stock is in focus Wednesday, after the electric-car manufacturer announced fourth-quarter deliveries below analysts expectations, while also saying that it would cut the price of its Model S, Model X and Model 3 by $2,000. The stock is down 6.5% Wednesday morning.

Shares of Sirius XM Holdings Inc.
SIRI, +2.80%
  were up 2.7%, after JPMorgan upgraded the stock to overweight from underweight.

How are other markets performing?

Asian markets closed sharply lower on Wednesday, with Hong Kong’s Hang Seng Index
HSI, -2.77%
leading the way with a 2.8% decline to 25,130.35, while the Shanghai Composite
SHCOMP, -1.15%
fell 1 .2% to 2,466.25.29.

In Europe, equities ended the day mixed, with the Stoxx Europe 600
SXXP, -0.13%
falling 0.1%, while the FTSE 100 rose 0.1%.

Oil futures are rising, with West Texas Intermediate crude
CLG9, +4.12%
for February delivery up 4.4% to $47.41 per barrel, while the U.S. dollar
DXY, +0.91%
rose 0.6% and the price of gold
GCG9, +0.42%
advanced 0.5%.

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