Your Thursday Market Blip 10/18/18

Your Thursday Market Blip 10/18/18

The Dow fell 327 points today on heavy trading volume to close at 25,379. Good earnings reports are being offset by fears of economic weakness in China and Europe. Both BTS and IBD remain on the sidelines and market watchers are saying that a strong US economy could drive interest rates to over 4% in the coming year.
The biggest reason for today’s decline was that Chinese stocks took it on the snoot in overnight trading. Nick Raich, CEO of The Earnings Scout, noted that investors are concerned about Chinese stocks being pushed lower by negative trade impacts on their profits. Nick feels that with Chinese stocks at a 4 year low the country needs to admit it is losing the trade battle, grab the phone and dial “The Donald” to make a deal. Good luck with that Nick! European stocks were also lower thanks to hints of possible Brexit delays and rising financial pressures in Italy where bank capital ratios resemble a soggy noodle.
With all this turmoil in Europe and China, things in the US are hunkey dory. The World Economic Forum or WEF posted its 2018 World Competitive ratings and for the first time since 2008 the US came out on top with a rating of 85.6. The US scored high for its strong labor market, financial system, productivity growth and entrepreneurial culture. It did not mention however its increasing use of reckless tweets. Coming in second place was Singapore followed by Germany, Switzerland and Japan.
Material, energy and natural resource stocks fared well today on strong earnings. Kinder Morgan, the largest natural gas pipeline company in the US posted earnings that beat estimates with a 7% revenue rise and a 40% increase in net income. The company sounded a positive tone going forward noting that “we are seeing growth like we have never seen” and saying it looks to continue. Alcoa Aluminum more than doubled what the street figured they would make sending shares higher, and Steel Dynamics posted what CEO Mark “Steel Mill” Millett said were record numbers for the company with expanding margins, a 32% sales gain and a 156% gain in profits. Mark said higher steel selling prices and demand across the company product line bodes well for 2019.