World stocks close to ending three-day rally over earnings results

Amid the busiest reporting week for S&P 500 companies, a European Central Bank (ECB) meeting and US GDP figures still to come this week, there is scope for volatility. Facebook reports its results later on Wednesday.

Trade tensions are already hurting shares. GM fell 7.42% after the car maker cut its 2018 earnings forecast, citing rising steel and aluminium costs due to US tariffs.

Sales of new US single-family homes fell to an eight-month low in June and data for the prior month was revised sharply lower, the latest indications that the housing market was slowing down. The PHLX housing index fell nearly 2%, while the overall US stock market was mixed.

The Dow Jones Industrial Average fell 51.61 points, or 0.2%, to 25,190.33; the S&P 500 gained 4.23 points, or 0.15%, to 2,824.63; and the Nasdaq Composite added 30.91 points, or 0.39%, to 7,871.68.

MSCI’s gauge of stocks across the globe gained 0.11%. The dollar index, which measures the greenback against a basket of six other major currencies, fell 0.05%, further scaling down from its July 19 peak for the year, when Trump suggested it had grown too strong.

Richard Bernstein, CEO of Richard Bernstein Advisors, said tariffs and a weak-dollar policy only exacerbate pressure on company profits. “I’m very surprised that analysts have not factored any of this in — that people are shocked that tariffs are inflationary.”

Gold, used as a guard against inflation, added 0.4% to $1,228.77 an ounce on the spot market.

The yield on the 10-year treasury note, a benchmark for global borrowing costs, eased off a one-month peak of 2.973% hit on Tuesday. Bond investors have been whipsawed by speculation the Bank of Japan (BOJ) could start unwinding stimulus and by bets that the gap between short- and long-term bond yields might widen if Trump pressures the US Federal Reserve to ease off rate hikes. The latter wager — on a “steeper” yield curve — unwound for a second straight day.

Benchmark 10-year notes last rose 4/32 in price to yield 2.9356%, and the gap between the two- and 10-year benchmarks fell 3.5 points to 27.7 basis points.

Oil prices rose for a second day after US crude inventories fell to the lowest since February 2015, easing worries about oversupply.

Reuters