Considering the sheer number of earnings reports out today, including several from bellwether/marquee companies, it was another listless day for stocks. That’s not necessarily bad nor is it good. It is what is and it means that over the past several days, investors have been taking cues from factors beyond quarterly earnings updates.
China is part of that because trade negotiations remain ongoing, but the good news is that the country appears poised to buy a massive $20 billion worth of goods from American farmers.
“Investors also watched the latest developments in the ongoing trade dispute. U.S. Vice President Mike Pence criticized China’s actions against protesters in Hong Kong while calling for greater engagement between the world’s two biggest economies,” according to Bloomberg. “The Asian nation aims to buy at least $20 billion of agricultural products in a year if it signs a partial trade deal, people familiar with the matter said.”
In stock-specific news, Tesla (NASDAQ:TSLA) surged, becoming the largest domestic automaker by market value following a stellar third-quarter earnings report. For those looking for more gauges of risk appetite, Amazon (NASDAQ:AMZN) and two Dow components report earnings after the bell today.
For today, the Nasdaq Composite gained 0.82%, while the S&P 500 added 0.21%. The Dow Jones Industrial Average was the offender among the major U.S. benchmarks, sliding 0.09% with fewer than a third of its 30 components higher in late trading.
Egregious Offender
Offenders were easy to spot today, but one that stands out for all the wrong reasons, obviously, is 3M (NYSE:MMM). Mentions of 3M in this space this year have been mostly negative simply because the industrial conglomerate’s price action has done little to suggest anything positive.
That trend continued today as shares of 3M lost 3.82%, extending its year-to-date loss to nearly 12% while cementing the stock’s status as one of the worst-performing members of the Dow. 3M’s 2019 outlook led to today’s decline.
The company forecast 2019 adjusted earnings of $9.09 a share, below the prior estimate of $9.25 and well below the $9.31 a share Wall Street was expecting. In third quarter, 3M sales of $8 billion missed estimates of $8.17 billion and it appears as though per share earnings of $2.72 only topped estimates due to a one-time gain.
3M is the latest industrial member of the Dow to issue cautious if not depressing guidance. Caterpillar (NYSE:CAT) did the same yesterday, but the stock rose. However, Caterpillar shares traded lower today, indicating investors are concerned about the slowing global economy and its impact on that stock.
Watch the Throne
Investors looking for better news among Dow components today should look at Microsoft (NASDAQ:MSFT), which jumped almost 2% following another stellar earnings report.
“For the quarter, the software giant reported revenue of $33.1 billion, up 14% from the comparable year-ago quarter and ahead of the Wall Street analyst consensus forecast of $32.23 billion,” reports Barron’s. “Profits were $1.38 a share, up 24% from a year ago and ahead of the consensus at $1.24 a share.”
Azure, the company’s cloud computing business, continues growing at rapid rate, notching revenue growth of 59% in the most recently completed quarter.
On A Related Note…
Perhaps in sympathy with the Microsoft rally or because they are the two Dow components reporting earnings this afternoon, Intel (NASDAQ:INTC) and Visa (NYSE:V) were two of the other Dow leaders today.
Following the bloodbath that was the quarterly update from Texas Instruments (NASDAQ:TXN) earlier this week, the semiconductor industry could sure some good earnings vibes from Intel, one of the group’s largest constituents.
Analysts are expecting Intel to report earnings of $1.23 per share and $18.05 billion of revenue.
Bottom Line on the Dow Jones Today
Earnings are always important, but these reports are taking on added significance against the backdrop of slowing global. Unfortunately, the likes of 3M and Caterpillar are confirming, not bucking the sluggish growth outlook and that’s something to be aware of into year end and heading into 2020.
“The IMF’s October World Economic Outlook shows world GDP growth slowing from 3.6% in 2018 to 3.0% in 2019 and 3.4% in 2020, lowered from July’s interim projections,” according to FactSet Research. “A 3.0% growth rate would be the slowest global growth since the 2008-2009 global economic slowdown. According to the IMF, risks to the global growth outlook skew to the downside as trade barriers and heightened geopolitical tensions disrupt global supply chains and hamper confidence, investment, and growth.”
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
