Stocks Claw Back From an Early Slide Amid China Worries

Stock investors were whipsawed on Tuesday, as earnings from a pair of industrial firms initially added to concerns about the global economy, but a tumble in oil prices later propped up consumer companies.

The S&P 500-stock index ended the day down 0.55 percent, at 2,740.69, after falling more than 2 percent.

Stock markets in China, Japan and Germany — among the countries most heavily exposed to a slowdown in global trade — set the tone with overnight trading declines, before high-profile earnings reports in the United States added to the dour mood.

After reporting weaker-than-expected third-quarter sales and profits, 3M fell 4.4 percent. The company cut its full-year estimates for profits, citing, in part, signs of a slowing Chinese economy.

Executives at 3M noted that they were seeing lower demand for the respiratory masks that Chinese consumers often wear at times of high air pollution. They also pointed out that auto production rates were “down significantly” in China and affecting demand for products like tapes, adhesives and acoustic material used to build cars.

Caterpillar, meanwhile, fell 7.6 percent even after the heavy-machinery maker’s quarterly results beat expectations. Analysts cited continuing headwinds for the company, which include rising freight costs as well as increases in the cost of steel as a result of the Trump administration’s imposition of tariffs on imports.

Rising commodity costs, and their potential to crimp profit margins that have been fattened by corporate tax cuts this year, have become a key concern for stock investors recently.

“The market is quickly changing its focus toward whether the best news from tax cuts is already reflected in earnings,” said Ed Clissold, chief U.S. strategist at the stock market research firm Ned Davis Research. “Earnings are very unlikely to decline, but the growth rate is going to slow. So any sign that that inflection point is here is going to be viewed negatively by the market.”

The economic backdrop did little to buoy investors’ spirits. In Europe, a dormant debt-based political crisis seems on the verge of reawakening after the European Union sent Italy’s budget back to its populist government on Tuesday. The bloc’s administrative body told Rome that it had to rewrite its proposed 2019 budget to reduce deficits, or face heavy fines.

And benchmark U.S. crude oil prices tumbled 4.7 percent Tuesday, to $66.09, over concerns about both the growth slowdown in China and comments from Saudi Arabia’s energy minister that the kingdom would lift production.

The drop in oil prices rippled through stock markets, sending U.S. energy stocks down more than 2.5 percent.

But falling energy prices also seemed to lift shares of companies that rely on consumer spending and could benefit as consumers spend less on gasoline. Companies selling consumer staples, such as groceries, rose slightly Tuesday.

Even beyond staples, the picture was not all bad in the United States. Shares of the Pulte Group, a homebuilder, rose 7.3 percent after it reported stronger earnings on higher home prices, helping to pull its fellow homebuilder Lennar higher. That is a welcome sign for the industry, which has been hammered this year as rising mortgage rates have hurt affordability.

McDonald’s reported better-than-expected third-quarter profits and revenue, and its shares jumped 6.3 percent. And shares of Verizon rose more than 4 percent after its results exceeded expectations.

The electric-car maker Tesla surged more than 12.5 percent after the company announced late Monday that it would move up its third-quarter earnings announcement to Wednesday. Some analysts interpreted the move as an indication that good results were on the way. Tesla shares were also helped when a high-profile Tesla critic and short-seller, Andrew Left of Citron Research, made an about-face and announced that he was now betting on a rise in the price.

Such isolated bright spots have been swamped out by the overall gloom in the stock markets this earnings season as investors scour results for indications that earnings growth will slow. The S&P 500 is down more than 6 percent since peaking on Sept. 20. Back then, the benchmark stock market index was up nearly 10 percent for the year. The tumble in stocks has cut that gain to less than 3 percent.

“People have been assuming that both fourth-quarter and, more importantly, 2019 growth, in terms of GDP growth and earnings, will continue along the path that it was on this year,” said Matt Maley, an equity strategist at the brokerage firm Miller Tabak. “And now we’re hearing otherwise.”