Dow, Nasdaq Diverge as Tech Earnings Crush Industrials; Tron, Cardano Lead Crypto Recovery

The Dow lagged the broader U.S. stocks market on Thursday after 3M reported dismal quarterly results, taking some of the luster away from tech bellwethers Microsoft and Facebook. Nevertheless, the technology-rich Nasdaq Composite Index scored a new intraday high before tapering off later in the session.

Stock Benchmarks Diverge

The Dow Jones Industrial Average was off by as much as 187 points Thursday morning before paring losses later in the session. It closed down 134,97 points, or 0.5%, at 26,462.08. Earlier this week, the blue-chip index came within 200 points of a record high.

Shares of Microsoft Corp (MSFT) surged 3.5% after the software giant reported market-beating quarterly results. The gains lifted Microsoft’s market cap beyond $1 trillion for the first time ever.

On the opposite side of the spectrum, 3M Co (MMM) reported a 13% plunge as earnings and revenue missed analysts’ forecasts.

Beyond the Dow blue chips, shares of Facebook Inc. (FB) rose sharply after the social media giant posted solid quarterly results and showed strong growth across its various Stories platforms.

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Tech shares propelled the Nasdaq Composite Index to a gain of 0.2%, where it closed at 8,118.68.

The broad S&P 500 Index of large-cap stocks reversed gains to settle at 2,926.17, where it was virtually unchanged. Five of 11 primary sectors reported declines, with industrials falling 2%. On the opposite side of the ledger, health care stocks rose 1.2%.

3M Shines Spotlight on Weak Global Economy

U.S. industrial giant 3M Co reported per-share earnings of $2.23 in the first quarter on revenue of $2.23. Analysts in a median estimate had called for an EPS of $2.49 on $8.025 billion in sales.

Underpinning the dismal quarter was a litigation charge of $548 million, or 72 cents per share, and weak performances across various key markets. Sales in Asa-Pacific, 3M’s largest end market, plunged 7.4%. Sales to Europe, the Middle East and Africa also fell 9.4%.

The decline in global sales follows a broad cooling trend in the world economy. The International Monetary Fund, World Bank and Organization of Economic Cooperation and Development have each downgraded their outlook on global growth for the year, citing trade tensions and key policy changes in Europe, Asia and the United States.

The U.S. economy appears to have turned a slight corner at the end of the first quarter. On Thursday, the Commerce Department said durable goods orders rose 2.7% in March, signaling the return of manufacturing demand. Orders for nondefense capital goods excluding aircraft – a key proxy for business investment plans – jumped 2.3% month-on-month, official data showed.

On Friday, the Commerce Department will release preliminary Q1 GDP data. The preliminary data are expected to show a slight cool down in economic growth at the start of the year.

Crypto Recovery Gathers Steam

Cryptocurrencies rebounded sharply on Thursday, with the likes of Tron (TRX) and Cardano (TRX) leading the market back toward $180 billion.

TRX, the world’s eleventh-largest blockchain, gained 8.3% to $0.0251 after lagging behind its major counterparts for most of the year.

ADA, which is just one spot ahead of Tron, jumped 7.2% to $0.0751. While Cardano hasn’t been nearly as abysmal as Tron this year, the cryptocurrency is mired in a three-week downtrend. It remains to be seen whether the fresh breakout on Thursday will lead to a more sustainable recovery.

Among the top-ten cryptocurrencies, all reported gains except for Tether (USDT), a dollar-backed stablecoin. Bitcoin (BTC) jumped 1.4% to $5,530.04, where it accounted for 54.6% of the total market cap.
Bitcoin cash (BCH) added 3.1% to trade at $282.09. Litecoin (LTC) was back above $74.00, having gained 2.7%.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi