By Anora Mahmudova and Victor Reklaitis, MarketWatch
Twitter shares plunge after results; Facebook to report after
close
U.S. stocks reversed earlier gains and headed south Wednesday as
declines in consumer-staples and energy shares outweighed gains in
tech.
Investors also were cautious ahead of the Federal Reserve
statement due at 2 p.m. Eastern Time.
The S&P 500 index reversed an opening advance to trade 6
points, or 0.3% lower at 2,162. Consumer staples, led by a 3.4%
drop in shares of Coca-Cola Co. (KO), and utilities, led the
downturn. Energy stocks were hit by another drop in crude-oil
prices, while technology, up 0.6%, and telecom shares, 0.1% higher,
showed modest gains.
The Dow Jones Industrial Average was off by 30 points, or 0.2%
at 18,443, with a decline in the blue-chip index checked by
Apple(AAPL), which soared more than 6% after the iPhone maker late
Tuesday posted quarterly profit that dropped from a year ago, but
beat expectations
(http://www.marketwatch.com/story/apple-earnings-weighed-down-by-iphone-slump-2016-07-26-16485385).
Revenue at the world's largest company by market value also fell,
yet topped Wall Street's forecasts.
Meanwhile, the Nasdaq Composite Index was holding on to a modest
climb of 15 points, or 0.3%, to 5,124, partially thanks to
Apple.
"Apple is not just a tech company, it is also a consumer
discretionary. It represents a pulse for consumer demand," said
Diane Jaffee, senior portfolio manager at TCW.
Read:iPhone SE, iPad Pro throw new wrinkle into Apple finances
(http://www.marketwatch.com/story/iphone-se-ipad-pro-throw-new-wrinkle-into-apple-finances-2016-07-26)
And:Analysts upbeat on Apple as 'toughest two quarters' now
behind it
(http://www.marketwatch.com/story/apples-earnings-analysts-upbeat-as-toughest-two-quarters-now-behind-it-2016-07-27)
On the Fed front, the U.S. central bank is expected to stand pat
on interest rates as it releases a policy statement later this
afternoon. Traders want to see if Fed Chief Janet Yellen and her
colleagues offer signals on the possibility of a September rate
hike
(http://www.marketwatch.com/story/what-to-expect-in-the-fed-statement-next-week-2016-07-22).
Read:Why the Fed may want to take away the stock market's punch
bowl
(http://www.marketwatch.com/story/why-the-fed-may-want-to-lurch-for-the-punch-bowl-2016-07-26)
"The Fed walks a delicate line. We anticipate hawkish talk, no
action, as the Fed would like to bring up expectations of a rate
hike in light of better economic data in the U.S. and as Europe is
not showing utter disaster," Jaffee said.
The key is whether the Fed's statement will "build expectations
of a hike in the second half of the year or deliver a more dovish
message highlighting the heightened risks, including Brexit," said
Craig Erlam, senior market analyst at Oanda, in a note.
"As it stands, the markets have once again come around to the
idea that there will be another hike this year, pricing in a 51%
chance of it happening by December," Erlam said.
Other markets: Oil futures dropped nearly 2% after data showed
domestic crude products, notably gasoline, rose unexpectedly.
European stocks were higher while Asian markets were mixed--with
the Nikkei up 1.7%, but Shanghai down 1.9%--as investors digested
conflicting reports
(http://www.marketwatch.com/story/dollar-rises-against-yen-amid-conflicting-reports-about-japan-stimulus-2016-07-27)
about the Japanese government's soon-to-be-released stimulus
measures. Gold futures edged higher, while the ICE U.S. Dollar
Index was slightly higher.
Economic news: Market reaction to disappointing durable-goods
orders
(http://www.marketwatch.com/story/us-durable-goods-orders-sink-4-in-june-biggest-drop-in-almost-two-years-2016-07-27)was
muted. Orders for durable or long-lasting goods made in the U.S.
sank 4% in June, much more than a 1.7% drop expected by economists
polled by MarketWatch.
A gauge of pending home sales rose in June
(http://www.marketwatch.com/story/pending-home-sales-tick-up-02-in-june-2016-07-27),
signaling slow-but-steady momentum for housing despite headwinds in
the market.
Individual movers: There is some drama involving brewers. Shares
Molson Coors Brewing(TAP) Anheuser Busch Invbev NV ADR (ABI.BT)
6.8% and 3.4% respectively after reports that SABMiller (SAB.JO)
has halted integration with ABInBev as it mulls a revised
offer.
Shares in Twitter Inc.(TWTR) fell 12% after the social media
company's disappointing earnings report late Tuesday
(http://www.marketwatch.com/story/analog-devices-agrees-to-148-billion-deal-for-linear-technology-2016-07-26).
Goodyear Tire & Rubber Co(GT) jumped 3.6% after the company
beat earnings estimates.
Linear Technology Corp.(LLTC) dropped 3.5% after Analog Devices
Inc.(ADI) on Tuesday announced it would acquire its fellow chip
maker
(http://www.marketwatch.com/story/analog-devices-agrees-to-148-billion-deal-for-linear-technology-2016-07-26)
in a cash-and-stock deal worth $14.8 billion.
Coke shares slid 2.8% after the drinks giant posted
weaker-than-expected quarterly sales
(http://www.marketwatch.com/story/coca-cola-shares-fall-after-sales-miss-estimates-2016-07-27),
while Boeing Co.(BA) gained 2.3% following a
smaller-than-anticipated quarterly loss
(http://www.marketwatch.com/story/boeing-shares-climb-after-smaller-than-expected-second-quarter-loss-2016-07-27).
Mondelez International Inc
(http://www.marketwatch.com/story/mondelez-shares-fall-after-sales-miss-estimates-2016-07-27).(MDLZ)
shares fell 0.3% after the food giant reported second-quarter sales
that missed estimates.
Comcast Corp.(CMCSA) shares were slightly lower even as its
results beat forecasts
(http://www.marketwatch.com/story/comcast-revenue-beats-as-video-subscribers-improve-2016-07-27).
Facebook Inc.(FB) and Whole Foods Market Inc. (WFM) are among
those due to report after the market's close.
Read earnings previews for Facebook
(http://www.marketwatch.com/story/what-to-expect-when-facebook-reports-earnings-2016-07-25)
and
(http://www.marketwatch.com/story/what-to-look-for-in-comcast-earnings-2016-07-26)Whole
Foods
(http://www.marketwatch.com/story/what-to-watch-for-in-whole-foods-earnings-2016-07-26).
(END) Dow Jones Newswires
July 27, 2016 12:15 ET (16:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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