U.S. Stocks Down as Boeing Shares Drop and Investors Wait for More Catalysts — Barrons.com

By Barbara Kollmeyer

Investors may be having second thoughts about pushing stocks higher after Wall Street notched fresh records on Monday. Developments on the trade front might help, but in the meantime, a drop in Boeing shares is weighing on sentiment.

On the heels of all major indexes reaching closing highs, with the Dow industrials gaining 100 points, stock futures were under modest pressure on Tuesday. Investors will get updates on housing starts, industrial production and job openings this morning.

Among stocks on the move, Boeing fell in premarket trading after the aircraft maker confirmed speculation that it will suspend production of its 737 Max jets. It was one factor cited as putting a dent — albeit temporary — on enthusiasm for equities on Tuesday.

“After a strike of new record highs investors are taking a breather that will not be long-lasting,” Peter Cardillo, chief market economist at Spartan Capital, told clients.

Bank of America has predicted what’s known as a melt-up for stocks in the first quarter, driven by supportive central bank policies. The move refers to a dramatic or sudden increase in an asset, which causes investors to stampede after it due to fear of missing out (FOMO). That surge can mark the end of an asset bubble, and sometimes a pullback will follow that mass move into a stock.

Jeroen Blokland, portfolio manager at investment company Robeco, says while this bull market may stretch into its 11th year, one big thing is needed. “It will come down to earnings in the end. If investors see better earnings growth from here, high-odds markets make new highs,” he said.

Blokland said investors need to be prepared for the fact that those corporate earnings may take a bit longer to perk up, testing their patience.

“With the phase one [U.S.-China] trade deal virtually done (at least it seems like that) earnings could be pressured for another quarter or so. There could be some kind of vacuum in which stocks struggle for a while, ” said Blokland. Read more here.

(END) Dow Jones Newswires

December 17, 2019 07:20 ET (12:20 GMT)

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