Back in December, China and the U.S. agreed to stop slapping tariffs on each other’s goods for 90 days while they tried to strike a deal on trade. Recent data has shown signs of weakness in China’s economy.
Stocks had traded slightly higher earlier in the day as investors awaited Netflix’s quarterly results. Netflix is scheduled to report after the close Thursday. The stock has been on a tear so far this year, rising more than 31 percent. Netflix’s earnings will arrive after the streaming giant announced it would raise monthly subscription prices by 13 to 18 percent, a move that was cheered by Wall Street earlier this week. Dow member American Express is also set to report after the close.
“Some of the information we have gotten are surprisingly negative to me,” said Kim Forrest, senior equity analyst at Fort Pitt Capital. “It’s a mixed sort of earnings season so far.”
“Today’s information is super important, not just for Netflix, because these are our most discretionary dollars,” Forrest said. “How is that being spent? Is it being spent the same way it was last year? I think that will tell us something about how healthy the consumer is and how healthy the economy is.”
Morgan Stanley reported earnings and revenue that fell short of Wall Street estimates. The company’s results were dragged down by poor performances in its trading and wealth management businesses. Morgan Stanley shares fell 4 percent. Citigroup, J.P. Morgan Chase and Wells Fargo also reported quarterly earnings this week.
Thursday’s moves came after the major indexes posted solid gains in the previous session, lifted by the sharp gains in Goldman Sachs and Bank of America. For the week, the major indexes are all up more than 1 percent.
“Upside should now prove limited for global indices, with S&P likely to start to weaken and pullback and any strength would face strong overhead resistance between 2630-40,” said Mark Newton, managing member at Newton Advisors, in a note.
“Indices have moved between 10-15% in the last 15 trading days since Christmas Eve, and have finally reached the 50% retracement levels (or fractionally below) from the decline from September/October,” he added. “Structurally this area remains difficult as several lows were made at this area and now offer resistance on this rally.”