A big day for Dow earnings was off to a troubled start Tuesday as Dow stocks Caterpillar (CAT) and 3M (MMM) toppled and China stock markets once again set the tone for global trade.
Among Dow stocks reporting earnings, 3M dropped 6.3% and Caterpillar spilled 7.1 lower after their quarterly reports. Dow peers McDonald's (MCD), United Technologies (UTX) and Verizon (VZ) bucked the early downtrend and gained ground following positive third-quarter performances.
XTech stocks led the early declines, with the Nasdaq Composite dumping 1.7%. FANG stocks veered lower as Amazon.com (AMZN) slid 2.8% and Netflix (NFLX) tumbled 1.9%. Sellers pummeled China-based names, as New Oriental Education (EDU) dived 12%, and Huazhu Group (HTHT) and TAL Education (TAL) each plunged more than 8%. Cannabis-sector stocks were active, with Tilray (TLRY) tanking 12% and New Age Beverage (NBEV) unraveling 13%.
The Dow Jones industrial average sluiced 1.5% lower at the open. Caterpillar and 3M led the declines. Apple (AAPL) dropped 1.8%. The S&P 500 tumbled 1.4%.
Truck maker Paccar (PCAR) and data storage leader Seagate Technology (STX) fell hardest among Nasdaq 100 stocks. Caterpillar, Centene (CNC) and Paccar posted the largest declines among S&P 500 names.
China Stock Market: The Bottom Holds
China's markets fell hard after two days of strong gains. Hong Kong's Hang Seng index dropped 3.1%. That was not its largest stumble this month, and it stopped short of undercutting the intraday low from Friday, which leaves intact so far the benchmark's effort to build a floor around 25,100.
The Shanghai Composite carved a 2.3% loss. That erased Monday's gain, but left the rebound begun Friday so far intact. Both the Shanghai and Hong Kong indexes are in bear markets.
In Japan, Tokyo's Nikkei 225 suffered a bit more technical damage. It pulled back 2.7% on Tuesday, sending the index back below its 200-day moving average and to its lowest mark since August. The Nikkei's pullback is now almost 10% below its Oct. 2 peak.
The selling carried over into Europe, where Frankfurt's DAX had dived 1.8%, the CAC-40 in Paris was down 1.1% and London's FTSE 100 was off 0.9% in afternoon trade.
Amazon Price Target Cut; Caterpillar Backlog Shrinks
Netflix dropped 1.9% lower, steering toward a fourth straight loss and once again breaking below its 200-day moving average.
FANG stock peer Amazon slumped 2.7% after Jefferies maintained its buy rating on the stock, but lowered its price target to 2260, from 2350. Amazon shares are in their fourth week below their 10-week moving average, down 15% from a September high, but still well above 40-week support.
Caterpillar collapsed 9%, despite narrowly topping third-quarter earnings expectations and posting a healthy beat on its revenue line. Management projected price increases and efficiencies would balance rising costs and tariff charges. Backlog decreased by about $400 million year-over-year across three business segments.
Caterpillar shares are headed for a fifth straight decline, trading well below key levels of support and at their lowest mark in 13 months.
McDonald's defied gravity and muscled up 5.2% as its third-quarter earnings topped views and revenue slipped less than expected by analyst consensus. U.S. comparable sales were just below estimates, but global sales were strong, led by high growth markets in Italy and Netherlands. McDonald's shares are working their way up the right side of an eight-month consolidation.
Verizon also gained, with a 3.2% jump. The telecom services giant easily topped consensus Q3 targets, and added 295,000 new subscribers, vs. expectations for 168,000. The stock topped a 27-month high, moving to new high ground above a six-month cup base.
Another bright spot was Cadence Systems (CDNS), which surged 8% as analysts upgraded the stock following strong third-quarter results. Shares opened back above their 40-week moving average, in a test of resistance at the underside of their 10-week line.
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