(Reuters) – US shares tumbled Monday when warnings from Caterpillar Inc and Nvidia Corp added concerns about a slower Chinese economy, and tariffs take a bite out of US business profits.
Shares of Caterpillar, the world's largest heavy equipment machine, fell 9 percent after the quarterly surplus. Wide missing Wall Street estimates, hit by demand in China and higher manufacturing and freight costs.
The company's shares were on their way to their worst day since August 2011 and accounted for nearly a third of Dow's fall. The S&P industrial index fell 1.32 percent.
"People had some optimism last week on earnings, as the numbers were pretty good, and today it has clearly gone the other way, much of so many companies' earnings," said Rick Meckler, a partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
Also damaged global investor sentiment showed China data earnings of industrial companies shrunk for another straight month in December hit by lower prices and weak factory activity amidst a protracted trade war with the United States.
As a sign of a slowdown in the world's second-largest economy becoming strong, investors are hoping for a compromise between Washington and Beijing on trade when officials meet later this week.
"With the Chinese economy, what it is is struggling, and with companies that feel the impact, the United States is also beginning to realize that there is enough motivation to get a deal done. It's just a matter of when," Ryan says. Nauman, marketing strategist at Informa Financial Intelligence in Zephyr Cove, Nevada.
Although earnings have largely surpassed Wall Street expectations, S & P 500 helps climb approx. about slow global growth has tempered expectations.
With Wall Street in the thick quarterly results this week, 72.6 percent of companies that have already reported exceeded profit estimates, according to IBES data from Refinitiv.
Since the reporting period kicked off two weeks ago, analysts estimates for fourth-quarter growth growth have been stable at around 14 percent, but expectations for 2019 earnings growth have fallen to 5.6 percent from 6.3 percent.
at 2.30 ET, the Dow Jones Industrial Average was down 1.17 percent at 24.448.34 points, while the S & P 500 had lost 1.08 percent to 2,635.87.
Nasdaq Composite fell 1.38 percent to 7.066.33.
Nine of the 11 major S&P sector indices were lower. Amazon.com Inc., Apple Inc and Microsoft Corp – all to report later this week – dropped more than 1 percent each and knocked down the S&P 500 and Nasdaq.
S & P energy consumption fell 1.4%. after US companies have added rigs for the first time this year, a signal that crude production may increase further. [O/R]
Amgen Inc dropped 4.1 percent, weighing most on the Nasdaq Biotech index, after Evercore ISI downgraded its stock, citing increased competition for its arthritis drug.
Falling problems exceed the NYSE progress with a ratio of 1.82 to 1; on Nasdaq, a 2.11 to 1 ratio favored decliners.
S & P 500 posted seven new 52 week heights and a new low; Nasdaq Composite recorded 29 new heights and 29 new lows.
(Reporting Noel Randewich; Further Reporting of Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing Lisa Shumaker)