MARKET SNAPSHOT: Dow, S&P 500 On The Verge Of Erasing All Of Tuesday's Rally
May 11 2016 - 4:13PM
Dow Jones News
By Anora Mahmudova and Victor Reklaitis, MarketWatch
The SPDR S&P Retail ETF is seeing its worst drop since
November
A selloff in U.S. stocks accelerated in late-trade Wednesday as
disappointing earnings from Disney and a slump among retailers led
to disquiet on Wall Street.
The downturn in sentiment threatened to wipe out sizable gains
from Tuesday's advance, when the Dow Jones Industrial Average
soared more than 200 points.
A slide in consumer-discretionary stocks, which include retail
shares like Macy's and Nike weighed on the Dow and S&P 500,
offsetting a 4% jump in oil prices.
The Dow sank 212 points, or 1.2%, to 17,715, led by Walt Disney
Co.'s 4.3% selloff and a 3.7% drop in Nike Inc. (NKE). Nearly all
of the blue-chip stocks were trading in negative territory. Only
Microsoft Corp.(MSFT) was in the green, hanging on to modest 0.1%
gain.
The S&P 500 dropped 18 points, or 0.9%, to 2,065, with nine
of its 10 main sectors trading lower. Retailers like Staples
Inc.(SPLS), Macy's Inc.(M), and Michael Kors Holdings Ltd.
(KORS).
The SPDR S&P Retail ETF (XRT) is down 4.3%, representing its
worst decline since Nov 2015.
Meanwhile, the Nasdaq Composite declined 47 points, or 1%, to
4,762.
"It's clear that sentiment was dented by disappointing earnings
today, especially by Disney, which has never missed earnings," said
Karyn Cavanaugh, market strategist at Voya Investment
Management.
Cavanaugh sounded optimistic in her outlook for the rest of the
year, however, despite the 7.5% decline in first-quarter profit
growth.
"Earnings in the second quarter will also be negative but not as
bad as in the first quarter and will improve in the second half of
the year," she said. Cavanaugh said she expects the Federal
Reserve, which has maintained an ultraloose monetary policy despite
raising rates for the first time in December, to keep benchmark
interest rates low.
Tuesday's rally for stock markets surprised some investors who
still harbor concerns about corporate growth and economic
sluggishness overseas.
"Yesterday's global equity journey was strangely optimistic when
much of the economic data has been a little light in recent times,"
said David Buik, market commentator at Panmure Gordon & Co., in
a note Wednesday. "As the threat of an increase in the Fed rate
dissipates, investors girded up their loins buoyed by higher oil,
better quality earnings and a feeling that perhaps markets had been
oversold."
"It wasn't so much a euphoric session; it was just a question of
sentiment improving," Buik added.
Other markets: On Wednesday, West Texas intermediate crude
(http://www.marketwatch.com/story/crude-prices-fall-on-sticky-worries-about-oversupply-issues-2016-05-11)
settled up 3.5%, at $46.23 a barrel after a drop in U.S. crude
inventories and declines in domestic production. European stocks
(http://www.marketwatch.com/story/european-shares-under-pressure-as-jcdecaux-oil-prices-pull-back-2016-05-11)
ended mostly lower, while Asian markets
(http://www.marketwatch.com/story/aussie-stocks-jump-as-oil-gains-but-other-asian-markets-mixed-2016-05-11)
closed mixed. Gold futures gained, as the ICE U.S. Dollar Index
pulled back.
Individual movers: Disney (DIS) was the biggest decliner within
the Dow, after the entertainment giant late Tuesday posted
weaker-than-expected quarterly results
(http://www.marketwatch.com/story/disney-results-boosted-by-star-wars-zootopia-2016-05-10-164853110).
"Despite two blockbuster movies in 'Star Wars' and 'Zootopia,'
Walt Disney failed to meet analysts' expectations," Buik said.
Read: Reactions to Disney's big miss--still "significant value"
in movies
(http://www.marketwatch.com/story/reactions-to-disneys-miss-investors-have-been-spoiled-still-significant-value-in-films-2016-05-11)
Staples Inc.(SPLS) was the biggest loser within the S&P 500,
diving 18% following news that its planned buyout of rival Office
Depot Inc.(ODP) ended unsuccessfully
(http://www.marketwatch.com/story/staples-office-depot-merger-killed-by-antitrust-claims-again-2016-05-10).
Macy's Inc.(M) shares sank 10% after the retailer reported
first-quarter sales that missed expectations
(http://www.marketwatch.com/story/macys-shares-fall-in-premarket-after-sales-miss-expectations-outlook-lowered-2016-05-11)
and issued a profit warning.
On the upside, Electronic Arts Inc.(EA) rose 14%, making it the
best performing stock on the S&P 500. The maker of videogames
late Tuesday reported better-than-expected quarterly results
(http://www.marketwatch.com/story/ea-leans-on-star-wars-to-beat-consensus-2016-05-10).
(END) Dow Jones Newswires
May 11, 2016 15:58 ET (19:58 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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