The bad news is that the entire day was in the red.  The really bad news is that the Dow dropped almost 550 points right out the gate.  The good news is that it steadily if choppily rose throughout the session to recoup all but 125 points.  What triggered the big sell off this morning was predicted yesterday.  The giants reporting in this week would determine a good or bad Q3.  The first two giants to report in this morning – Caterpillar and 3M – unfortunately did not deliver expected revenue and profit-growth and this was attributed largely to the trade war, reigniting all the worries investors have about the market in general.  But as the session progressed, good news started filtering in giving investors cause to believe the news may not be so bad and start buying again.  Despite the initial panic, projections for Q3 profit growth remain unchanged at a vigorous 22 percent and volume was very high at 9.1 billion.  

tue  OCTOBER 23, 2018 / 5:41  pm 

Wall St. extends recent fall but ends well off day's lows

Caroline Valetkevitch

DJ:  25,191.43  -125.98       NAS:  7,437.54  -31.09          S&P:  2,740.69  -15.19      10/23

NEW YORK (Reuters) - U.S. stocks fell on Tuesday after worries about the earnings outlook added to recent selling pressure, though major indexes ended well off the day’s lows as investors snapped up beaten-down shares late in the session.

Shares of Caterpillar tumbled 7.6 percent after the heavy-equipment maker maintained its 2018 earnings forecast, following forecast increases in the previous two quarters.  3M Co slid 4.4 percent after cutting its full-year profit outlook due to foreign currency-related challenges.

That reignited worries over the impact of rising borrowing costs, wages and tariffs on corporate profits and caused S&P industrial stocks to slide 1.6 percent.  Along with worries over profit growth, concerns over the upcoming U.S. mid-term elections and Italy’s budget have also sent investors scrambling out of stocks.  The S&P 500 energy index fell 2.7 percent, the most of any sector, as oil prices plunged after Saudi Arabia said it could supply more crude quickly if needed. 

Investors trimmed most of the losses in afternoon trading as some thought the losses were overdone. Technical buying at support levels around 2,700 on the S&P 500 also helped stocks to bounce back, strategists said.  “There was a lot of early morning fear, and when the market didn’t accelerate further to the downside, you saw some people coming in to pick up some stocks,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.  The day’s earnings disappointments aside, he said, technology earnings later this week could be upbeat.

Microsoft, Intel and Alphabet all are due to report this week.

The Dow Jones Industrial Average fell 125.98 points, or 0.5 percent, to 25,191.43, the S&P 500 lost 15.19 points, or 0.55 percent, to 2,740.69 and the Nasdaq Composite dropped 31.09 points, or 0.42 percent, to 7,437.54.  The S&P 500 has declined for five straight sessions and is now down 6.5 percent from its record closing high on Sept. 20.  The Nasdaq again flirted with correction territory, falling more than 10 percent from its Aug. 29 record closing high before paring losses to end off those levels. 

Earnings from S&P 500 companies are expected to have increased about 22 percent in the third quarter from a year ago, though 2018 is seen as a peak for the profit cycle, according to I/B/E/S data from Refinitiv.

Among gainers, McDonald’s rose 6.3 percent after it beat estimates for quarterly same-store sales on strong demand in international markets, while Verizon rallied 4.1 percent after it beat estimates for profit and net new phone subscribers.

Declining issues outnumbered advancing ones on the NYSE by a 2.44-to-1 ratio; on Nasdaq, a 2.13-to-1 ratio favored decliners.  The S&P 500 posted three new 52-week highs and 86 new lows; the Nasdaq Composite recorded nine new highs and 382 new lows.

About 9.1 billion shares changed hands on U.S. exchanges. That compares with the 7.9 billion daily average for the past 20 trading days, according to Thomson Reuters data.