Wall Street dips as geopolitical risks linger, earnings loom

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April 12, 2017 8:00 PM

U.S. stocks opened slightly lower on Wednesday amid lingering geopolitical risks and as investors braced for the first rush of corporate earnings, starting Thursday.

The S&P 500 fell below its 50-day moving average and the CBOE Volatility index shot up to its highest level since November.

U.S. stocks opened slightly lower on Wednesday amid lingering geopolitical risks and as investors braced for the first rush of corporate earnings, starting Thursday. The United States launched missiles at a Syrian airfield last week to retaliate a deadly chemical attack on civilians. The strikes pushed President Donald Trump, who came to power in January calling for warmer ties with Syria’s ally Russia, and his administration into a confrontation with Moscow.

Meanwhile, Chinese President Xi Jinping called on the U.S. for a peaceful resolution with North Korea, which has warned it would launch a nuclear attack if provoked by the United States, as a U.S. Navy strike group headed toward the western Pacific.

The S&P 500 fell below its 50-day moving average and the CBOE Volatility index shot up to its highest level since November. Prices of gold, a favoured safe-haven asset, were flat but remained close to the highest level hit in November. The dollar index was also little changed, while oil prices edged up slightly.

Investors are keeping a close track of the quarterly earnings to support lofty valuations on Wall Street, following a rally fueled by bets on Trump’s pro-growth agenda. The big banks unofficially kick-off the season on Thursday, with results due from JPMorgan, Citigroup and Wells Fargo.

“It would be very important what they (banks) offer as forecast because stock prices imply better times ahead and investors are looking for assurances and positive forecasts to be issued,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

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At 9:39 a.m. ET (1339 GMT), the Dow Jones Industrial Average was down 28.31 points, or 0.14 percent, at 20,622.99, the S&P 500 was down 3.88 points, or 0.16 percent, at 2,349.9 and the Nasdaq Composite was down 4.18 points, or 0.07 percent, at 5,862.60.

Financial and technology stocks were the main drags for the second day. The S&P 500 financial index was down 0.5 percent, led lower by banks, while chip stocks Qualcomm and Broadcom were the biggest drags on the technology index.

Qualcomm dropped after it was asked to refund Canada’s BlackBerry $814.9 million in an arbitration settlement over royalties for certain past sales. Delta Air Lines was up 3.5 percent at $46.90, following a quarterly profit that beat analysts’ expectation.

Declining issues outnumbered advancers on the NYSE by 1,728 to 798. On the Nasdaq, 1,337 issues fell and 822 advanced. The S&P 500 index showed four 52-week highs and no lows, while the Nasdaq recorded 20 highs and 10 lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila)

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