* S&P 500 hits intraday record, but closes lower
* Poor earnings cloud European equities
* Dollar slips on potential delay in U.S.-China trade deal
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Herbert Lash
NEW YORK, Oct 29 (Reuters) - Global stocks faltered on
Tuesday as strong earnings from U.S. drugmakers Merck and Pfizer
and expectations the Federal Reserve will cut rates was offset
by a potential delay in a U.S.-China trade deal, which clouded
sentiment and weakened the dollar.
European shares fell as companies headed toward their worst
quarterly earnings in more than three years, according to the
latest estimates by Refinitiv, underscoring concerns about the
deteriorating health of Europe Inc.
The U.S. S&P 500 index eked out a fresh record intraday
high, led by Merck and Pfizer, though a disappointing profit
report from Google parent Alphabet kept the technology-rich
Nasdaq in the red.
The benchmark index had breached its all-time high set in
July on Monday, spurred by hopes of a U.S.-China trade deal and
the likelihood of further stimulus from the U.S. central bank on
Wednesday when it concludes a two-day meeting of policy-makers.
The steepening of the two- and 10-year yield curve suggests
a budding risk-on sentiment among investors, now that some form
of a U.S.-China trade agreement is likely, said Yousef Abbasi,
global market strategist at INTL FCStone Financial in New York.
The spread in the yield curve has gained
about 20 basis points since leaving negative territory, a
recession indicator, in early September.
However, a U.S. administration official said on Tuesday that
an interim trade agreement might not be completed in time for
signing in Chile next month as expected, while adding that did
not mean the accord is falling apart.
Technology shares, a sector of the S&P 500 that
has been closely tied to trade progress, fell 0.92%.
Drugmakers Merck & Co Inc and Pfizer Inc
rose after reporting upbeat third-quarter results, gaining 3.5%
and 2.5%, respectively. The healthcare sector, which
has been the second-worst performer among the 11 major S&P 500
sectors this year, rose 1.16% as the session's best performer.
A rotation into value stocks that investors have posited for
months seems be taking hold, Abbasi said, pointing to recent
gains in the SPDR S&P Regional Banking ETF as evidence.
The ETF has traded below 56 since May and could be set for
further upside after a recent rally from below 50, he said.
"We're seeing some of those high-flying tech names
struggle," Abbasi said. "We're getting that risk-on move from
sectors that have been ignored all year, the sectors that
haven't been loved."
Apple and Microsoft fell, as did
Amazon.com.
MSCI's gauge of stocks across the globe
gained 0.05%, while the pan-European STOXX 600 index
lost 0.16%. MSCI's emerging markets index rose 0.07%.
On Wall Street, the Dow Jones Industrial Average fell
19.26 points, or 0.07%, to 27,071.46. The S&P 500 lost
2.53 points, or 0.08%, to 3,036.89 and the Nasdaq Composite
dropped 49.14 points, or 0.59%, to 8,276.85.
Oil pared losses amid expectations that U.S. refined product
stockpiles declined last week.
Brent crude rose 2 cents to settle at $61.59 a
barrel, while U.S. West Texas Intermediate crude settled
down 27 cents to $55.54.
Britain's FTSE 100 fell 0.34% as uncertainty over a
looming general election compounded a 4.0% drop in shares of BP
after the oil major posted a sharp drop in third quarter
profit.
The losses in Europe followed a mixed performance in Asia,
where Japan's Nikkei rose 0.4% to reach levels last seen
a year ago. Shanghai blue chips dithered either side
of flat.
Benchmark 10-year U.S. notes rose 4/32 in price
to yield 1.8367%.
The dollar index fell 0.09%, with the euro up
0.13% to $1.1112. The Japanese yen strengthened 0.10%
versus the greenback at 108.86 per dollar.
(Reporting by Herbert Lash; Editing by Bernadette Baum and
Sonya Hepinstall)
BP (BP.)
