Major US stock indices fell slightly, as weak retail sales data, combined with continued fears of a trade war between the US and China, offset the solid quarterly results.

A report from the Ministry of Commerce showed that retail sales fell 0.3% in September as households cut spending on cars, building materials, hobbies, and online shopping. It was the first and biggest fall since February. August data was revised to show that retail sales were up 0.6% instead of 0.4%, as previously reported. Economists had forecast retail sales to rise 0.3% in September. Compared to September last year, retail sales grew by 4.1%.

Weak retail sales data reinforced concerns about the likelihood of a recession. It should be noted, however, that not all data were gloomy. A report prepared by the National Association of Home Builders and Wells Fargo showed that homeowners' confidence rose to their highest level in almost two years. According to the data, the housing market index jumped three points in October to 71 points. This is the highest level since February 2018. The index was expected to remain at 68 points. Recall that in October 2018, the index was 68 points. The value of the indicator above the level of 50 points indicates favorable sales prospects.

On Tuesday, the U.S. House of Representatives passed a bill aimed at protecting the civil rights of Hong Kong residents. China expressed "strong indignation" about the bill and warned that if it is passed, it could harm bilateral relations.

Nevertheless, US President Donald Trump said that the trade agreement with China is now being documented in paper form, and it is likely to be signed after his meeting with Chinese President Xi Jinping in Chile. He also added that China has already begun to purchase US agricultural products.

However, The Wall Street Journal reported that there are questions about how much American agricultural products China will actually buy and for how long. Meanwhile, Bloomberg News said that China wants U.S. tariffs on Chinese goods to be canceled before continuing with purchases.

The Fed’s Beige Book also attracted some market attention, which reported that US companies lowered their expectations for their own prospects for the next 6-12 months, as they continue to face the negative consequences of a slowdown in global economic growth and uncertainty in international trade. Until early October, inclusive, the US economy grew from small to moderate, which is slightly worse than the estimate proposed in the September Beige Book. This report is compiled on the basis of data received from companies in all regions of the country.

Most of the DOW components completed trading in the red (19 of 30). Outsiders were shares of Exxon Mobil Corporation (XOM; -1.65%). The biggest gainers were Johnson & Johnson (JNJ; + 1.77%).

Most S&P sectors recorded an increase. The services sector grew the most (+ 0.4%). The largest decline was shown by the technology sector (-0.6%).

At the time of closing:

Dow 27,001.98  -22.82 -0.08%

S&P 500 2,989.69 -5.99 -0.20%

Nasdaq 100 8,124.18 -24.52 0.30%

U.S. stock-index futures fell on Wednesday, amid fresh fears about the protracted trade war between the U.S. and China, which, however, were somewhat offset by strong quarterly results of the U.S. companies. 

Global Stocks:

Amazon (AMZN) target raised to $2400 from $2225 at Credit Suisse

(company / ticker / price / change ($/%) / volume)

AT&T (T) initiated with a Market Perform at Bernstein

Verizon (VZ) initiated with a Market Perform at Bernstein

Johnson & Johnson (JNJ) upgraded to Neutral from Underweight at Atlantic Equities

Bank of America (BAC) reported Q3 FY 2019 earnings of $0.75 per share (versus $0.66 in Q3 FY 2018), beating analysts’ consensus estimate of $0.68.

The company’s quarterly revenues amounted to $22.955 bln (+0.3% y/y), generally in line with analysts’ consensus estimate of $22.730 bln.

BACrose to $30.15 (+1.41%) in pre-market trading.