Wednesday's Stock Market Open: Earnings Take Back Seat To Brexit, China Worries

Corporate earnings took a backseat Wednesday as traders again worried over Brexit and the need to get something on paper before Thursday’s European Council meeting, as well as China’s threat to take action if the U.S. Congress passes legislation supporting Hong Kong democracy protesters.

The Dow Jones Industrial Average 22 points at midday to 27,045 while the Nasdaq Composite dropped 18 points to 8,130 and the S&P 500 dipped a point to 2,994.

Hopes for an agreement before the Oct. 31 British exit from the European Union dwindled as uncertainty grew over whether Northern Ireland’s Democratic Unionist Party would accept a compromise. The main sticking point in an agreement concerns the border between the North and the Republic of Ireland. British Prime Minister Boris Johnson has long rejected the so-called backstop that essentially would have left Northern Ireland in the euro customs zone. The latest proposal involves drawing a regulatory and customs border in the Irish sea.

Though Johnson has said he’s against extending the Oct. 31 Brexit deadline, the Guardian reported an extension may be required to work out a smooth separation.

China meanwhile warned of “strong countermeasures” following U.S. House passage on unanimous voice votes of legislation backing pro-democracy demonstrators in Hong Kong. A spokesman for China’s Ministry of Foreign Affairs warned U.S. lawmakers to stop meddling in China’s internal affairs but stopped short of spelling out retaliatory actions.

The U.S. and China already are embroiled in a trade war.

U.S. consumers also tightened the purse strings last month. Retail sales fell 0.3% in September to $525.6 billion, the first dip since February. The slump fed hopes for a cut in the federal funds rate when the Federal Open Markets Committee meets at the end of the month.

On the earnings front, Bank of America (BAC) reported a third-quarter profit of $5.78 billion or 56 cents a share, compared with $7.17 billion or 54 cents a share in the year ago quarter. Profits were trimmed by a $2.1 billion charge related to the pending dissolution of a payment-processing partnership with First Data Corp.

Global markets were mixed. In Asia, Hong Kong’s Hang Seng closed up 0.61% while Japan’s Nikkei 225 rose 1.2% but the China Shanghai Composite was off 0.41%. Australia’s S&P/ASX added 1.27%.

In Europe, the London FTSE 100 closed off 0.61% while the German DAX pushed 0.32% higher and the French CAC 40 dipped 0.09%. The Stoxx Europe 600 was off 0.05%.

On currency markets, the British pound added 0.67 cent to $1.2851 and the euro was up 0.41 cent at $1.1073.

Oil futures were higher. Crude oil gained 77 cents to $53.58 while Brent crude added 82 cents $59.56. Gold and silver were higther.