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09 October 2018
 |
| financial markets (The Total Investment & Insurance Solutions) |
Stock indexes turned higher in midday trading on Wall Street Tuesday as
technology companies and other sectors recovered some of the sharp losses
caused by last week's rapid rise in interest rates.
Raw-material producers sank on worries that
higher costs and weakening demand are eroding profits. Treasury yields dipped
in the first day of bond trading after a holiday on Monday.
KEEPING SCORE: The S&P 500 was up 7
points, or 0.3 percent, at 2,892, as of noon Eastern time. It had wavered
between small gains and losses earlier. Slightly more stocks rose than fell on
the New York Stock Exchange.
The Dow Jones industrial average rose 31, or
0.1 percent, to 26,518, and the Nasdaq composite fell 43, or 0.6 percent, to
7,779.
INTEREST RATES: The yield on the 10-year
Treasury dipped to 3.21 percent from 3.22 late Friday.
Bond yields have been at center stage since
last week, when their quick rise following several encouraging reports on the
economy rattled markets. If rates go high enough, they can slow the economy and
drive investors away from stocks and into bonds.
The 10-year yield was just 3.05 percent last
Tuesday, and the speed of the recent rise has been more concerning to investors
than the level. Rates are still relatively low, and the Federal Reserve's main
interest rate is still less than half of what it was in 2006 before the Great
Recession.
The International Monetary Fund cited higher
rates, as well as ongoing trade battles, as a reason for downgrading its
forecast for global economic growth late Monday.
MATERIAL CONCERNS: PPG, which sells paints
and coatings, sank 9.4 percent to $99.30, the biggest loss in the S&P 500,
after it warned that higher costs for oil and other materials will weigh on its
third-quarter results. It also said that demand is weakening in China, as well
as in the United States and Europe for automotive refinish products.
The profit warning helped send raw-material
producers in the S&P 500 down 2.1 percent for the sharpest loss among the
11 sectors that make up the index.
TECH RECOUPS: Technology stocks have been
leading the market, both on the way up for most of the past year and on the way
down over the last week. Technology companies are producing some of the biggest
profit growth in the market, but their stocks are also trading at relatively
high prices relative to those earnings. That makes them susceptible when worries
are high that rising interest rates will hurt stocks with high price-earnings
ratios.
Tech stocks in the S&P 500 are down 3
percent so far this month, nearly triple the loss for the overall index. But
the group rose 0.4 percent Tuesday as interest rates dropped.
MARKETS ABROAD: Japan's Nikkei 225 fell 1.3
percent, Hong Kong's Hang Seng fell 0.1 percent and the Shanghai Composite
index rose 0.2 percent.
In Europe, the CAC 40 in France rose 0.3
percent, and the German DAX gained 0.3 percent. The FTSE 100 in London edged up
0.1 percent.
IMF DOWNGRADE: The International Monetary
Fund has said the global economy will grow 3.7 percent this year, the same as
in 2017, but down from its earlier forecast of 3.9 percent. The IMF also cut
its forecast for Chinese economic growth in 2019 to 6.2 percent, which would be
its slowest since 1990.
COMMODITIES: Benchmark U.S. crude rose 60
cents to $74.89 per barrel. Brent crude, the international standard, rose 84
cents to $84.73.
Gold rose $2.40 to $1,191.00.
CURRENCIES: The dollar fell to 129.69
Japanese yen from 112.98 yen late Monday. The euro slipped to $1.1471 from
$1.1488, and the British pound held steady at $1.3090.The Total Investment & Insurance Solutions
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