US stocks have tumbled after warnings from Caterpillar Inc and Nvidia Corp added to concerns about a slowing Chinese economy and tariffs taking a bite out of US corporate profits.
Shares of Caterpillar fell 9.13 per cent on Monday and had their worst day since 2011 after the company’s quarterly profit widely missed Wall Street estimates, hit by softening demand in China and higher manufacturing and freight costs. Caterpillar’s drop accounted for nearly one-third of the Dow’s fall, and the S&P industrial index dropped one per cent. Nvidia fell 13.82 per cent after the chipmaker cut its fourth-quarter revenue estimate by half a billion US dollars on weak demand for its gaming chips in China and lower-than-expected data centre sales. The Philadelphia semiconductor index slumped 2.09 per cent, while the S&P technology index dropped 1.4 per cent.
Also hurting global investor sentiment, China data showed earnings at industrial companies shrank for a second straight month in December, hit by slowing prices and weak factory activity amid a protracted trade war with the US. As signs of a slowdown in the world’s second-largest economy become stark, investors are pinning their hopes for a compromise between Washington and Beijing on trade when officials meet on Wednesday and Thursday. Although earnings have largely surpassed Wall Street’s expectations, helping the S&P 500 climb about 12 per cent from its December lows, worries about slowing global growth have tempered expectations.
With Wall Street in the thick of quarterly results this week, 72.6 per cent of companies that have already reported have exceeded profit estimates, according to IBES data from Refinitiv. The Dow Jones Industrial Average fell 209.98 points, or 0.84 per cent, to 24,528.22, the S&P 500 lost 23.92 points, or 0.90 per cent, to 2,640.84 and the Nasdaq Composite dropped 79.18 points, or 1.11 per cent, to 7,085.68.
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