It was such a great Q3 day with Apple and Facebook both turning in stellar reports.  But the most spectacular development has been that in three short days the earnings forecast for Q3 has gone from a -2.0% (vs a -3.2% in early October) to an astounding -0.8% today.  (What are the bets that it’s going to be in positive numbers this time next week?)  But despite all this good news, the Dow still tanked 140 points and the culprit was good old trade war angst again.  Encouraging news yesterday and the index was up 115.  Today there’s a report that Chinese officials have doubts about ever being able to make a deal with Trump and the market sinks again.  As today’s expert comments that the rallies have been triggered by so much anticipation on the trade deal and that “this market would come in (sink) very quickly if in fact word got out the Chinese are completely walking away.”  So it’s all pins and needles until further notice.  Volume was quite brisk at 7.9 billion. 

Thu OCTOBER 31, 2019 / 4:27 pm 

Wall Street retreats from record on trade cloudiness

Chuck Mikolajczak

DJ:  27,186.69  +115.27       NAS:  8,303.98  +27.12         S&P:  3,046.77  +9.88       10/30

DJ:  27,046.23  -140.46        NAS:  8,292.36  -11.62          S&P:  3,037.56  -9.21        10/31

NEW YORK (Reuters) - U.S. stocks fell on Thursday as conflicting tones surrounding a possible trade deal between the United States and China eclipsed strong earnings reports from Apple and Facebook.  Mixed signals around trade gave investors reason for caution after a Bloomberg report said Chinese officials have doubts about whether it is possible to reach a comprehensive long-term trade deal with Washington and U.S. President Donald Trump.  But Trump later said the two countries would soon announce a site where a “Phase One” trade deal will be signed after Chile canceled a planned summit set for mid-November that was to be the venue for a signing.

The decline was the second for the S&P 500 in the past seven days, after the benchmark index notched intraday record highs in the past three sessions and a closing record in two of the past three days.  “They rallied this market so much in anticipation of not only the trade deal - but interest rates and everything else - this market would come in very quickly if in fact, word got out the Chinese are completely walking away,” said Ken Polcari, senior market strategist at SlateStone Wealth LLC in Jupiter, Florida.  “Today’s action, with the market down, is absolutely nothing for anyone to get super concerned about because after the rally we have had for two weeks, you have to suspect at some point the market has to back off a little bit.”

The trade-sensitive industrials sector .SPLRCI lost 1.14%, while China-exposed chipmakers also fell, sending the Philadelphia Semiconductor index .SOX down 0.62%.  However, corporate earnings were a bright spot. Apple Inc (AAPL.O) rose 2.26% after the iPhone maker forecast sales for the holiday shopping quarter ahead of expectations.  Facebook Inc (FB.O) gained 1.81% after reporting an uptick in users in lucrative markets and its third straight rise in quarterly sales growth..

The Dow Jones Industrial Average .DJI fell 140.46 points, or 0.52%, to 27,046.23, the S&P 500 .SPX lost 9.21 points, or 0.30%, to 3,037.56 and the Nasdaq Composite .IXIC dropped 11.62 points, or 0.14%, to 8,292.36.  Earnings for the quarter are now expected to decline 0.8%, according to Refinitiv data, an improvement from the 2.2% decline expected at the start of the month. 

Data on Thursday showed a marginal rise in consumer spending in September, casting doubts on consumers’ ability to continue driving the economy, a key pillar of the current economic environment.  The Labor Department’s October jobs data on Friday will be closely watched after the Fed signaled on Wednesday there would be no further cuts unless the economy takes a negative turn.

Among other stocks, Estee Lauder Cos Inc (EL.N) fell 3.62% after the cosmetics maker cut its forecast for full-year profit.  Kraft Heinz Co (KHC.O) jumped 13.44% as the packaged foods company said it was spending more on marketing key brands next year, after reporting a better-than-expected third-quarter profit. 

Declining issues outnumbered advancing ones on the NYSE by a 1.66-to-1 ratio; on Nasdaq, a 1.67-to-1 ratio favored decliners.  The S&P 500 posted 26 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 71 new highs and 83 new lows. 

Note: It seems they’ve stopped publishing volume data at Reuters as this is the fifth consecutive day that there’s been no reporting.  However, per the CBOE, 7.9 billion shares were traded.