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Dow snaps longest losing streak in a year

Stocks barely snapped their longest slump in more than a year.The Dow gained 60 points on Wednesday after a fi...

Posted: Apr 26, 2018 6:10 AM
Updated: Apr 26, 2018 6:10 AM

Stocks barely snapped their longest slump in more than a year.

The Dow gained 60 points on Wednesday after a five-day losing streak. The S&P 500 inched higher, but the Nasdaq closed lower for the fifth straight day - its longest skid since November 2016.

Boeing, the best-performing company on the Dow this year, helped the market get back on track. An optimistic forecast lifted Boeing's shares 4%.

Investors hoped corporate earnings season would provide a respite to a fragile market. The Dow has been fighting to claw its way back from correction territory -- down 10% since its record high in late January.

Earnings have been strong: 83% of companies to report on the S&P 500 so far have beaten Wall Street's profit expectations. If that number holds, it would be a record, according to John Butters, senior earnings analyst at FactSet. Around 30% of companies have reported.

But their results have failed to lived up to investors' high expectations, which were raised by corporate tax cuts.

Investors feel "it's not going to get any better" than right now, said Ed Yardeni, president of Yardeni Research.

Related: Boeing earnings are good and getting better

But several forces have caused a "re-balancing of the market" in recent weeks, said Quincy Krosby, chief market strategist at Prudential Financial.

Rising bond yields are putting pressure on stocks. The yield on the 10-year US Treasury note breached 3% for the first time in more than four years Tuesday. Inflation fears have contributed to the run-up in yields. Inflation eats away at the value of fixed bond payments, leading investors to demand a higher yield in return.

Car loans and mortgage prices are linked to the 10-year note, and rising yields will raise borrowing costs for companies and consumers. Investors worry that will slow consumer spending, the backbone of the economy.

Related: Hedge fund manager Kyle Bass: 'There's been a trade war with China since 2001'

Higher bond yields could also become more attractive than volatile stocks for many investors.

The 10-year yield inched up to 3.01% on Wednesday. If the yield marches to 3.05%, it could spark a new wave of selling, Krosby predicted.

"The uncertainty of what will happen next in the bond market is weighing on stocks," Yardeni said.

Higher commodity costs have also jolted investors. Raising production costs could dent profit margins and force companies to take up the price of goods on consumers.

On Tuesday, Caterpillar, an industrial bellwether, warned on its earnings call that margins wouldn't get any higher and the last three months were its "high-water mark" for the year. Caterpillar lost 6% on Tuesday and sent a chill across the market. A 425-point rout on Tuesday pushed the index back into negative territory for the year.

Oil prices have jumped toward $70 a barrel in recent weeks on geopolitical tensions in Syria and Iran. OPEC's production cuts have mopped up a global oil glut that caused prices to crash to $26 a barrel in 2016.

The combination of higher yields and oil prices have heightened expectations of inflation -- and tightening from the Federal Reserve. When inflation rises, that raises the possibility the Federal Reserve will hike interest rates at a faster pace to prevent the economy from getting too hot. The Fed is on track to raise rates for the second time this year in June.

Another alarming sign for investors: the US dollar is at a four-month high. A weak dollar has raised the value of exports for multinational companies, but it has rallied as yields climb.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 918230

Reported Deaths: 15011
CountyCasesDeaths
Marion1252491952
Lake623371084
Allen52301746
Hamilton43009443
St. Joseph41155584
Elkhart32831485
Vanderburgh29698436
Tippecanoe26442247
Johnson23106414
Hendricks21708338
Porter21255340
Clark16988222
Madison16899378
Vigo15562272
Monroe14186190
LaPorte13961235
Delaware13613215
Howard13531258
Kosciusko11150134
Hancock10534159
Warrick10431174
Bartholomew10233166
Floyd10099202
Wayne9557216
Grant8858194
Morgan8654158
Boone8231109
Dubois7521123
Henry7391126
Dearborn734186
Noble7208100
Marshall7168127
Cass7060117
Lawrence6803150
Jackson638980
Shelby6386106
Gibson5999105
Harrison587984
Huntington586490
Montgomery5663101
DeKalb555691
Knox532999
Miami523183
Clinton522464
Putnam519067
Whitley509851
Steuben480267
Wabash470192
Jasper465760
Jefferson456091
Ripley439074
Adams435565
Daviess4008106
Scott389563
White383457
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Clay376455
Greene375589
Wells375183
Fayette363074
Posey351841
Jennings341756
Washington324046
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Sullivan294947
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Pike200938
Blackford163834
Pulaski155250
Crawford140818
Benton138316
Newton138141
Brown130646
Martin124416
Switzerland122310
Warren112616
Union92211
Ohio75811
Unassigned0461

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1319265

Reported Deaths: 21265
CountyCasesDeaths
Franklin1480641537
Cuyahoga1311202313
Hamilton948871307
Montgomery647451122
Summit548531041
Lucas49502853
Butler45993649
Stark39954963
Lorain30438525
Warren29170326
Mahoning25988629
Clermont24726278
Lake24088411
Delaware21722140
Licking19822239
Fairfield19780218
Greene19671266
Medina19208285
Trumbull19195506
Clark17188321
Portage15585224
Richland15540228
Wood15187208
Allen13654254
Miami13283244
Muskingum11821148
Wayne11448234
Columbiana11100239
Tuscarawas10388264
Marion10273144
Pickaway10162128
Scioto9766124
Erie9479170
Ross8979172
Lawrence8225116
Hancock8105140
Ashtabula8083184
Geauga7976155
Belmont7791183
Jefferson7093168
Huron7087125
Union703549
Washington6823116
Athens666163
Sandusky6608132
Darke6394135
Knox6308120
Seneca6113135
Auglaize569888
Ashland5631110
Shelby555799
Mercer545188
Brown533067
Defiance5278100
Madison527368
Crawford5148113
Highland514876
Fulton508781
Clinton505379
Logan494582
Preble4788110
Putnam4733106
Guernsey439057
Williams437281
Champaign426463
Ottawa425783
Perry414051
Jackson402259
Pike367140
Morrow359149
Fayette353951
Coshocton345064
Hardin341868
Adams338864
Gallia329254
Holmes3148107
Henry312668
Van Wert299269
Hocking280467
Wyandot271858
Carroll250451
Paulding231742
Meigs197842
Monroe178649
Noble160340
Morgan153528
Harrison145740
Vinton130217
Unassigned05
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