Dow surges by 400 points as Wall Street recovers from rout - as it happened

Graeme Wearden

from on 2018-10-25 20:58 (#41HNS)

US and European markets bounce back after Asia falls into a bear market

Latest: Wall Street bounces back as wild October continues
Draghi hopeful of Brexit deal, but....
FTSE 100 hit seven-month low, before rebounding
Introduction: Market sell-off gathers pace as fears build
Full story: Asia Pacific shares plunge into bear territory

9.58pm BST

Alphabet also missed Wall Street forecasts.

The company behind Google posted revenue of $33.74bn in the last quarter, missing estimates of $34.05 billion.

"We're seeing a larger than expected slowdown in Google properties' revenue, representing its core search business. This is likely related to the ramp-up in competition from Amazon, as consumers increasingly turn to the ecommerce giant for their product searches."

9.55pm BST

Amazon has taken a bite out of Wall Street's new-found optimism tonight, by missing analyst expectations:

Here's Bloomberg's take:

Amazon.com Inc. reported sales that missed analysts' estimates, and issued a disappointing revenue forecast for the busy holiday quarter, suggesting the online marketplace may be reaching a saturation point in the U.S.

Revenue gained 29 percent to $56.6 billion in the third quarter, the e-commerce giant said Thursday in a statement. Analysts' projected $57.1 billion. Sales will be from $66.5 billion to $72.5 billion in the current period, falling short of analysts' average estimate of $73.8 billion. Shares declined as much as 6.5 percent in extended trading.

9.15pm BST

Ut-oh... Amazon and Alphabet have just released results as the echo of the closing bell fade. And Wall Street is NOT happy.....

Amazon drops on revenue miss https://t.co/CegFAC8UE3 pic.twitter.com/sWxZCoL6FM

EARNINGS: Alphabet Q3 EPS $13.06 vs. $10.42 Est.; Q3 Revs. $33.74B vs. $34.04B Est. " $GOOGL slides nearly 7% after-hours https://t.co/jom3i6vSEZ pic.twitter.com/uRRdEksH3Q

EARNINGS: Intel Q3 EPS $1.40 Adj. vs. $1.15 Est.; Q3 Revs. $19.16B vs. $18.11B Est. " $INTC up 4% after-hours https://t.co/vMmAQHBDf7 pic.twitter.com/ScL3iSzHtX

9.09pm BST

Breaking: After Wipeout Wednesday, it's Turnaround Thursday.

October has maintained its run of wild swings tonight, as Wall Street bounces back.

US Equity Close:
S&P 500: +1.84%
Dow: +1.54%
NASDAQ: +2.95%

*NASDAQ 100 RALLIES 3.4% FOR BIGGEST ADVANCE SINCE MARCH

8.50pm BST

The Nasdaq's recovery is even punchier than the Dow's.

The tech-focused index has leapt by 3%, with just a few minutes to go.

8.28pm BST

The rebound has legs! With just 30 minutes to go, the Dow is up an impressive 490 points, or 2%, at 25,073.

That means its recovered a large chunk of the Wednesday wobble.

6.58pm BST

The Dow is holding onto its gains. With two hours to go, it's up 380 points at 24,963, up 1.5%.

6.36pm BST

The ongoing market turbulence hasn't deterred US company Yeti from floating on the stock market today.

5.03pm BST

After tumbling in early trading, European stock markets have recovered to end the day higher.

In London, the FTSE 100 has climbed back over the 7,000 point mark, ending up 41 points at 7,004. It would be higher, but for WPP's woes.

Wall Street started on the front foot with tech stocks on the rise after falling sharply in the previous session. Upbeat results from Microsoft and Telsa have gone some way to calming investor nerves after disappointments from Caterpillar and 3M earlier in the week. Whilst a slew of risk factors have hit traders confidence hard this month, investors will be looking searching for the bottom of this recent shake out. So far market shake out's this year have been buying opportunities and whilst we are still in a bull market, we don't see why this one should be any different right now.

4.06pm BST

Neil MacKinnon, Global Macro Strategist at VTB Capital, says today's governing council meeting came at a tricky time for the ECB.

The ECB's decision to hold current interest rate levels at 0% takes place at a time of a cyclical slowdown in the Eurozone economies, as well as persistently subdued core CPI inflation. Business growth is at its slowest in two years and companies' expectations of future growth have slipped to the lowest in four years. The Italian budget drama is also high on the agenda and the stand-off between Rome and Brussels is unlikely to be resolved. Also noteworthy is the risk of a worsening 'doom-loop' between Italian banks and their holdings of domestic sovereign debt.

Italy is not Greece and Rome will react badly if the ECB resorts to its 'enforcement tools' of closing down bond purchases and turning off the liquidity tap for the Italian banking system."

4.02pm BST

Here's some expert reaction to the European Central Bank press conference today:

"At today's press conference Draghi chose to strike a relatively hawkish note, while acknowledging somewhat weaker economic momentum as of late.

There has been some concern in the market about a number of disappointing data prints this month, including the flash PMIs yesterday, but evidence so far has not been strong enough to change the ECB stance.

Mario Draghi stuck to the script again at today's ECB Press Conference, delivering yet another 'balanced' assessment of the eurozone's economy. The ECB President quelled recent concerns of weaker economic data as merely a slowdown of growth momentum, not a downturn. This aside, the ECB remain committed to ending the central bank's bond-buying programme come December.

Transitory or not, Draghi and Co. will need to buy themselves more time to distinguish what effect trade wars, Brexit and the recent Italian budget crisis will have on its interest rate hike timeline in 2019.

The bottom line is that the ECB is on a gradual path of monetary policy normalisation for now, but risks from protectionism, a further slowdown in external demand, domestic political instability, Brexit and volatility in financial markets cast a dark shadow on the ECB's plans.

Policy uncertainty has increased both externally and domestically: international trade tensions have remained high, there is no solution for the Brexit issue in sight, and the Italian government seems determined to defy the European fiscal rules. The recent turmoil in financial markets is a new addition to the list of downside risks.

Between Italy's budget drama and the precarious nature of Brexit, there is a lot that threatens the Eurozone's stability. For the time being these pressures haven't risen to a level requiring ECB intervention.

Time will tell however, as latest figures suggest cracks are beginning to show in the region's economy."

3.04pm BST

Today's bounceback on Wall Street means some investors may be snaffling up bargains. Or at least, what they hope are bargains.

CNBC explains why traders may be putting their toes into the water again:

"The technical picture has turned increasingly bearish this month," said Ed Yardeni, president and chief investment strategist at Yardeni Research. "The percentage of S&P 500 companies trading above their 200-day moving averages was down to 37% after yesterday's debacle."

He noted, however, that prior similar declines during this bull market have "marked buying opportunities." Yardeni added: "If this is still a bull market, as we believe it is, then the latest bearish technicals and October's swoon should mark the latest buying opportunity."

U.S. markets rebounded at the open after yesterday's tumble that sent the Dow and S&P 500 negative for the year. The Dow jumped 200 points at market open, with all other major indexes also rising. https://t.co/XC0cnmv4qG

2.37pm BST

Back in the markets, shares are rising in New York as traders return to the fray after yesterday's alarming late sell-off.

The Dow Jones industrial average jumped by 192 points at the open, or 0.8%. That's an encouraging start, after Wednesday's 608-point slide.

2.24pm BST

Mario Draghi warns that there could be 'uneasiness' in the financial markets, unless Britain and the EU make progress towards a Brexit deal.

If this lack of a solution continues, and approaches the end date, the the private sector itself will have to prepare on the assumption that it will be a hard Brexit.

That's where there will be financial uneasiness in markets.

. @ecb chief, Mario Draghi: "I should warn about another aspect: if a lack of solution will continue, the private sector itself will have to prepare at the assumption of a hard #Brexit" @eunewsit

2.18pm BST

Boom! Mario Draghi has admonished politicians, such as Donald Trump, who put pressure on central banks to change their policy.

He's been asked the pressure on the European Central Bank and the Fed to maintain their stimulus programmes, or do more.

Central bank independence is a precious thing. It's precious because it's essential for the credibility of the central banks, and credibility is essential for effectiveness.

Actually the legislators themselves, who are often the very same people who are arguing for the central bank to do this or that, should be the first ones to care about monetary policy effectiveness and central banks achieving their goals.

Answering a question about mounting criticism toward central banks (i.e. Trump's complaint about higher rates in US), #Draghi says central bank independence is a precious thing because it's essential for the credibility and effectiveness of monetary policy.

2.07pm BST

Q: What options do you have if the financial markets continue to fall, if economic data worsens, or if relations between Italy and the EC deteriorate further?

We still have tools in the toolbox, Draghi replies.

2.00pm BST

Mario Draghi is fending off several questions about Italy, and whether he's worried about the rise in its bond yields.

He's arguing that the spillover impact from Italy onto other countries is limited so far.

If they lose value, they are denting into the capital position of the banks.

Mario Draghi revealed that @VDombrovskis participated in the Governing Council of the @ECB and that referring to Italy he said that rules should be respected but also there should be room for dialogue pic.twitter.com/DNbRaC8w26

on #Italy: #Draghi says has been a 'fiscal discussion' & is "confident an agreement will be found". Refers to increase in interest rates as not significant YET but limits government's ability to keep expanding budget. Keeping an eye on contagion.
(@VDombrovskis was also there)

1.52pm BST

Mario Draghi adds that he is 'confident' that an agreement between Italy and the European Commission over its budget will be found .

[reminder, the EC rejected Italy's plans on Tuesday, but Rome is refusing to rewrite them]

1.49pm BST

Q: What does the ECB think about the clash between Rome and Brussels over Italy's 2019 budget?

Italy is a fiscal discussion, Draghi replies, so it wasn't discussed much at today's meeting.

1.49pm BST

Onto questions..

Q) Did the ECB discuss downgrading their assessment of the eurozone economy today?

1.44pm BST

Draghi ends his statement with his traditional call for eurozone government to 'substantially step up' their structural reforms, to take advantage of the ECB's stimulus measures. Eurozone states must raise their long-term growth potential, he adds.

1.41pm BST

Over in Frankfurt, ECB president Mario Draghi is explaining today's interest rate decision.

1.37pm BST

Here's Bloomberg's take on those durable goods figures:

Orders placed with U.S. factories for business equipment declined in September for a second month - a sign momentum in capital investment has paused as global trade concerns persist https://t.co/6hmn4kBlU7 pic.twitter.com/dWhBwYzxwV

1.36pm BST

Newsflash: Orders for durable goods at American firms has fallen for the second month running (if you strip out aircraft and defence sales).

Core durable goods orders shrank by 0.1% last month, new data shows, following a 0.2% decline in August. That's only a small move, of course, but it suggests US manufacturing isn't sizzling. Perhaps tariffs are having an effect.

1.16pm BST

Twitter's earnings beat is going to help drive Wall Street up again, after yesterday's late rout.

The tech-focused Nasdaq is now forecast to jump by 1.7% when trading begins. The Dow is on track to gain 220 points (or more than a third of yesterday's slump).

1.09pm BST

Twitter isn't the only company beating forecasts today.

Comcast, which recently won the battle for Britain's Sky News, has also impressed investors.

Comcast beats profit estimates in the third quarter, with the largest U.S. cable provider posting a big increase in broadband subscribers https://t.co/o6zeSheFf7 pic.twitter.com/ae6DquKcF6

12.58pm BST

NEWSFLASH: The European Central Bank has (to no-one's surprise) left eurozone interest rates at their current record lows.

That means the headline borrowing rate remains at zero, while banks face a negative interest rate of -0.4% on their deposits at the ECB (to encourage them to lend the money instead).

12.52pm BST

Dr Ben Marder, Senior Lecturer in Marketing at University of Edinburgh Business School, is concerned that Twitter's active user base is shrinking.

He thinks that the site's Fake News problem is hurting:

"Donald Trump, no matter your opinion of the man, is Twitter gold. His tweets attract vast swathes of traffic to the site and he has no doubt had a positive effect on Twitter's stock price in the past few years. This was a mutually beneficial relationship as Twitter was pivotal for Trump's 2016 presidential election success. However, despite Twitter posting higher than expected earnings and revenue in Q3 2018, monthly active users have fallen for a second quarter in a row as the company continues to purge bots and fake accounts. It seems Trump is now biting the hand that used to feed him.

"Twitter, much like other social media giants are starting to bleed-out from the large thorn in their side which is 'fake news'. Worsening the wound are world-wide governments, including the US who are threatening regulatory action against the tech giants for facilitating the dissemination of fake news.

A very big part of the Anger we see today in our society is caused by the purposely false and inaccurate reporting of the Mainstream Media that I refer to as Fake News. It has gotten so bad and hateful that it is beyond description. Mainstream Media must clean up its act, FAST!

12.44pm BST

Twitter is benefitting from a surge in advertising deals, explains Anthony Capano, managing director of Europe for Rakuten Marketing:

While Twitter focused its efforts earlier this year on cleaning the platform of fraudulent actors, it's clear that the focus has returned to investing in global opportunities for advertisers.

Earlier in Q3 the platform revealed a host of content partnerships including Bloomberg, Sony Music and NBCUniversal that would bring hundreds of hours of livestreams and other videos to the platform in the Asia-Pacific region.

12.39pm BST

Some Silicon Valley early risers are waking up to the news that Twitter did better than expected last quarter:

It's 4:39am and Twitter shares are up more than 13%. Revenue jumped to $758.1 million, compared with average analyst projection of $701.3 million. 3Q Net income was $789 million, compared to net loss of $21 million last year. #tictocnews' pic.twitter.com/52V498UyTq

12.14pm BST

Newsflash: Twitter has smashed Wall Street forecasts with its latest financial results.

The social network site grew its earnings to 21 cents per share in the last quarter, well ahead of estimates of 14 cents.

Twitter shares soar more than 10% in pre-market trading after strong earnings beat https://t.co/K6N7Y0aUSU pic.twitter.com/rSW2RZ56Aj

12.02pm BST

2018 has been a pretty rough year for the markets, with nearly $7 trillion (!) wiped off stock values since the end of January.

Ouch! Nearly $7tn wiped off world stock mkt index MSCI World since the Feb correction. pic.twitter.com/Uws5VLLraJ

We're in a period of pressure building to the downside as we get more down days than up and the breadth of the decline is important as is the volume.

However whilst the recent spike in volatility may be seen as meaning we're past the peak, there may yet be a few breaths left in this old bull. Valuations - while not going for a song - are a lot more attractive at about 16x forward earnings. Confidence is clearly lacking however and it may require a softening tone from the Fed to assuage concerns on rates.

11.52am BST

Advertising giant WPP is having a torrid day, as its new boss gets to grips with the business's problems.

Shares are down 16%, at their lowest level since December 2012, after it missed sales forecasts and slashed its guidance.

Clearly we have underperformed our competition in the third quarter. We are not going to sugarcoat the reality."

11.23am BST

Facebook has been buffeted by the stock market sell-off.

Its shares slid by 5% yesterday, and are down 17% this year as the social network giant faces tough questions about extremism and election interference.

Facebook failed to sufficiently protect the privacy of its users before, during and after the unlawful processing of this data. A company of its size and expertise should have known better and it should have done better.

10.54am BST

After that shaky start, European stocks have now turn positive for the day!

Germany, France and Italy have all rebounded from this morning's lows, with Italian banks are leading the rally.

Salvini, who is also the leader of the ruling League party, said on the sidelines of a conference in the northern city of Verona that the Italy/Germany bond yield spread would inevitably fall if it followed the real economy.

10.41am BST

Russ Mould, investment director at AJ Bell, says investors are nervous about the state of the world.

He explains:

The chief concerns are the potential negative impacts of higher interest rates, weaker global growth and the knock-on effects of trade tariffs.

"The FTSE 100 fell 0.7% in early trading on Thursday to 6,912 with pharmaceuticals, insurers and oil companies the biggest contributors to the index's decline.

10.34am BST

Back in Australia, insurance group AMP's shares crashed by 25% today, as it paid the price for past misdeeds.

AMP shocked investors by revealing that its wealth management business suffered a $1.5bn asset withdrawal in the last quarter.

10.06am BST

Our latest Brexit dashboard shows how consumer spending slowed last month, even before the stock market turmoil hit confidence.

Two leading economists argue that the government needs to take bold action, by ending austerity and helping businesses navigate Brexit uncertainty:

10.03am BST

Britain's troubled retail sector is reeling from another blow this morning, as Debenhams outlines plans to shut up to 50 stores.

The closure plan puts thousands of jobs at risk, on top of tens of thousands of redundancies at fellow chains such as Toys R Us, Mothercare, Carpetright and Maplin.

"The decision to focus on a 'profitable core' of stores is a good one. However, the question is whether closing just ten stores now, with a view to reducing store numbers further over the next three to five years will be enough in view of the speed of changes in the marketplace as consumers shift to buying online.

"The high street needs support, but some of the ideas being mooted by Government could prove counterproductive. For example, the Chairman of John Lewis, Sir Charlie Mayfield has recently spoken out against the Amazon tax and many bricks and mortar retailers fear that a blanket levy on online sales would be tantamount to hitting the high street when it's down, as most of them sell goods online too.

9.44am BST

German firms are also anxious about the danger that Britain leaves the EU without a deal, says IFO.

The row between Italy and the EU over its 2019 budget is another worry, it adds.

9.28am BST

Just in: business morale in Germany has taken a tumble this month.

#Ifo business climate eases in Oct in line with earlier #ZEW and #PMI signals. Both expectations and current assessment remain above troughs in July. The German boom has still air to run a bit further. pic.twitter.com/iQ3XG8O4mI

"Firms were less satisfied with their current business situation and less optimistic about the months ahead.

Growing global uncertainty is increasingly taking its toll on the German economy."

8.52am BST

Worryingly, there doesn't seem to be a single cause for the current sell-off (unlike in 2008, say, or in 2015 when investors fretted about China's economy).

Instead, a cocktail of problems are being blamed, as traders worry that the long bull market in shares may be petering out.

There are many symptoms but no one can diagnose the illness. Geopolitics, rising bond U.S. bond yields, a more hawkish looking U.S. Federal Reserve (the Fed), slowing Chinese growth, a strong U.S. dollar and the already well known problems in some emerging economies have all contributed to the market unease.

The focus for investors had been on corporate earnings. Against all the macro headwinds, the micro factor of strong U.S. corporate earnings had been enough to insulate the market. So far the U.S. earnings season has been decent, with approximately 30% of the S&P 500 companies by market capitalization having reported and 83% of those having beaten analyst's expectations for earnings.

8.26am BST

There are heavy losses in Europe too.

Germany's DAX index has fallen by 0.8%, to its lowest level since December 2016.

8.25am BST

Here are the best and worst performing shares on the FTSE 100 this morning. Utilities, precious metal miners, and other defensive stocks are in - most other companies are out!

8.12am BST

Boom! Britain's FTSE 100 has hit a seven-month low at the start of trading in London.

The blue-chip index has fallen by 75 points to 6887, a drop of over 1%, its lowest level since late March.

8.02am BST

Some context:

Stocks have fallen for 13 of the past 15 trading days, including a 3.3 percent drop on Oct. 10 that was the market's worst fall in eight months. The S.&P. is now down more than 0.6 percent for the year. https://t.co/nplRRaaVnJ

7.57am BST

Stephen Innis of foreign exchange firm OANDA fears that the US stock markets are on the "verge of crumbling", after last night's late rout.

If people are struggling to find a driver I suggest, they wake up and smell the coffee.

The catalysts are nothing new -- Tariffs, Italy, Brexit, Saudi Arabia.

7.55am BST

7.51am BST

Yesterday was the worst day for tech stocks on Wall Street for seven years, dragging the Nasdaq into bear-market territory and wiping out the Dow's 2018 gains.

And today, markets were in retreat from Sydney to Shanghai, my colleague Martin Farrer reports:

In Australia the benchmark ASX200 closed down 164 points or 2.8% as it suffered its fifth straight day of losses. In Japan the Nikkei was off 3.7% and has now dropped around 13% from a 27-year peak of 24,448.07 touched in early October.

A broad indicator of shares in the region - the MSCI Asia Pacific index - has now fallen 20.3% from the year-to-date high set on 29 January, representing an official bear market. The Vix "fear" index, which measures volatility across the market, has spiked sharply this week and was up 21% overnight.

7.35am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

"The fear is palpable in stock markets at the moment,"

"This could get much worse before it gets better. Collapses happen after falls. That's the danger."

#FTSE100 called -55pts at 6907, following Asia and Wall St lower pic.twitter.com/PjP6Z7Fcqf

European Opening Calls:#FTSE 6905 -0.84%#DAX 11109 -0.74%#CAC 4926 -0.56%#MIB 18307 -0.96%#IBEX 8654 -0.27%

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