Caterpillar, a bellwether for industrial companies, reported fourth-quarter earnings that fell well short of analysts' expectations and said it expects construction growth in China to be flat in 2019 following years of significant growth. Nvidia, the chipmaker, also cited weakness in China as it lowered its fourth-quarter guidance Monday.
Its fourth-quarter profit result was US$2.55 per share, about 15 percent below estimates, the biggest miss since the fourth quarter of 2008.
Additionally, Caterpillar shares fell almost 10% after the company reported lower-than-expected earnings for the Q4 and pointed out to weak demand from China as the primary reason.
Wall Street was set to open lower on Monday after weak earnings and full-year forecasts from Caterpillar set a dour note for an earnings-heavy week that also includes a Federal Reserve meeting and U.S. Shares are down 5% in premarket trading.
Lawrence De Maria, a William Blair analyst, said the 2019 forecast was "indicative of slowing growth and a maturing cycle that implies peak markets, and effectively may put a lid on any cyclical industrial rally for now".
Wall Street is keyed in on China and how its slowing economy will play out for companies ranging from Caterpillar to Apple.
China, which accounts for up to 10 percent of company sales, last week reported its slowest economic growth in almost three decades. -China trade war will affect more companies, said Kristina Hooper, chief global market strategist at Invesco.
Nvidia's lowered guidance hit shares of other semiconductor companies, sending shares of Advanced Micro Devices down by almost 8 percent. More than 100 S&P 500 companies are scheduled to report their earnings, including Apple, Microsoft, Amazon and Facebook.
The beginning of the week started with investors displaying a weak sentiment towards the futures market as the U.S Stock Index Futures shows a downward trend.
Crude oil prices tumbled 3% overnight on rising concerns of a demand slowdown from China and evidence of increasing USA oil output, which inhibits the oil market from reaching a supply-demand balance.
Next round of U.S.
Samsung Electronics Co's quarterly profit and revenue missed estimates on sputtering demand for memory chips during the last three months of previous year, the same period Apple saw anemic sales in China.
Stocks are opening broadly lower on Wall Street as traders worry about the impact on US companies of a slowdown in China's economy.
The price of oil did not have a big reaction to the Trump administration imposing sanctions Monday on the state-owned oil company of Venezuela.
Stocks on Wall Street, down more than 1 percent for most of the session, recouped some losses at the close.
The Dow Jones Industrial Average fell 208.98, or 0.8 per cent, to 24,528.22.
The world's second-largest economy, which contributes about one-third of global growth, has been weakening for years after averaging more than 10 percent growth for three decades through 2010.