By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch
Ford slumps 9.7% as earnings miss view; Facebook extends gains
on strong quarterly results
U.S. stocks on Thursday turned decidedly lower after early
volatility, as disappointing earnings along with a drop in oil
prices and mixed U.S. economic data weighed on risk appetite.
The moves added to Wednesday's losses, after the Federal Reserve
left interest rates unchanged but attempted to tentatively set the
table for a possible increase of rates as soon as September,
stating that near-term risks to the economic outlook
(http://www.marketwatch.com/story/fed-appears-more-open-to-september-rate-hike-2016-07-27)have
diminished.
The S&P 500 index was off 6 points, or 0.3%, at 2,161, led
by a 0.9% drop in telecom shares, followed by a 0.6% loss in energy
stocks. Eight of the index's main sectors were in negative
territory, while utilities were leading the gains, up 0.2%,
followed by tech, up less than 0.1%.
Ford Motor Co.(F)slumped 9.7% following an earnings miss
(http://www.marketwatch.com/story/fords-stock-tumbles-after-profit-misses-expectations-2016-07-28),
leading the S&P decliners and on track to see their largest
daily drop in more than five years.
The Dow Jones Industrial Average lost 86 points, or 0.5%, at
18,385, led by a 1.9% drop in Boeing Co..(BA) but boosted by a 1%
gain in Apple Inc. (AAPL).
Meanwhile the Nasdaq Composite Index was down 2 points, or less
than 0.1%, at 5,137. Strong gains in Facebook Inc.
(http://www.marketwatch.com/story/facebook-posts-huge-revenue-beat-2016-07-27)(FB)
boosted the tech-heavy Nasdaq, after the company late Wednesday
soundly beat on earnings and revenue.
But the social-media network's Chief Financial Officer Dave
Wehner said the company expects lower ad revenue growth in the next
two quarters and just modest growth in its ad load.
Read:Facebook's rapid growth is about to slow down
(http://www.marketwatch.com/story/facebooks-rapid-growth-is-about-to-slow-down-2016-07-27)
(http://www.marketwatch.com/story/facebooks-rapid-growth-is-about-to-slow-down-2016-07-27)Meanwhile,
the Fed's hint at a potential interest-rate hike weighed on
telecom, the market's big winner this year, up 20% year to
date.
"Telecom and utilities have been the place where fixed income
investors have gone to hide," while government bond yields recently
tumbled to all-time lows, said Kim Forrest, senior portfolio
manager at Fort Pitt Capital. Now that "a September rate hike is on
the table, though December is more probable," these bond-like
stocks are taking a hit, Forrest added.
More broadly, as equity valuations are at historical highs and
earnings reports overall have been coming in mixed, "all the market
wants to know is whether the earnings recession is ending," said
Quincy Krosby, market strategist at Prudential Financial, pointing
to the main benchmarks' inability to push towards new highs over
the last couple of sessions.
But others said that the fact that the market hasn't fallen
precipitously after an impressive run that brought the S&P and
the Dow to all-time highs, is a good sign.
"Simply seeing the range remain in tact has been a constructive
phenomenon: the longer the [S&P] moves sideways after an almost
10% move, the greater the odds that another up leg results," said
Frank Cappelleri, technical analyst at Instinet, in an email.
On the economic front, the number of people who applied for
unemployment benefits
(http://www.marketwatch.com/story/jobless-claims-climb-14000-to-266000-2016-07-28)last
week rose from historical lows, while the nation's trade gap
widened in June to $63.3 billion, as imports rose faster than
exports. Meanwhile, wholesale inventories were unchanged and retail
inventories inched higher.
Stocks to watch: Shares of ConocoPhilips (COP) were down 1%
after the oil company reported a bigger loss than expected.
(http://www.marketwatch.com/story/conocophillip-loss-widens-as-revenue-slumps-36-2016-07-28)
Dow Chemicals Co.(DOW) inched up 0.4% after earnings and revenue
came in better than forecast by Wall Street.
Colgate-Palmolive Co.(CL) was unchanged after the consumer
products firm said profit rose in the second quarter.
(http://www.marketwatch.com/story/colgate-palmolive-shares-rise-after-earnings-beat-estimates-2016-07-28)
Harley-Davidson Inc.(HOG) gained 1% after the company beat on
both profit and revenue
(https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=0ahUKEwjY3P-mkZbOAhUDTCYKHVGmBs8QqQIILTAF&url=http%3A%2F%2Fwww.marketwatch.com%2Fstory%2Fharley-davidson-beats-on-earnings-revenue-lowers-2016-motorcycle-shipment-guidance-2016-07-28&v6u=https%3A%2F%2Fs-v6exp1-ds.metric.gstatic.com%2Fgen_204%3Fip%3D205.203.130.22%26ts%3D1469708091514619%26auth%3Dol6dpt42mbijwgltfzjjxqkdfopmhwzt%26rndm%3D0.7774477069103305&v6s=2&v6t=5112&usg=AFQjCNG1hOjwMybsdl4OL7kojLkSNvrvaw&sig2=KsifhvXI0hzUzuk2isGAhQ&bvm=bv.128450091,bs.2,d.dmo).
Hershey(HSY) swung to a profit in the second quarter
(https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&cad=rja&uact=8&ved=0ahUKEwjUqaiykZbOAhWD3SYKHWGQAVsQqQIIMTAH&url=http%3A%2F%2Fwww.marketwatch.com%2Fstory%2Fhershey-co-beats-second-quarter-earnings-expectations-2016-07-28&usg=AFQjCNG6tO8gVxg-k6yqBqTCEYiDGTeLfg&sig2=b8nvyO71rUAmRmkBzu0qXA&bvm=bv.128450091,bs.2,d.dmo)
(https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&cad=rja&uact=8&ved=0ahUKEwjUqaiykZbOAhWD3SYKHWGQAVsQqQIIMTAH&url=http%3A%2F%2Fwww.marketwatch.com%2Fstory%2Fhershey-co-beats-second-quarter-earnings-expectations-2016-07-28&usg=AFQjCNG6tO8gVxg-k6yqBqTCEYiDGTeLfg&sig2=b8nvyO71rUAmRmkBzu0qXA&bvm=bv.128450091,bs.2,d.dmo),
leading the shares to rise 2.2%.
Shares of MasterCard Inc. (MA) climbed 1.3%, after the payments
processing and credit card company beat second-quarter profit and
revenue expectations
(http://www.marketwatch.com/story/mastercards-stock-jumps-after-profit-sales-beat-expectations-2016-07-28).
HCA Holdings Inc.(HCA) lost 2% after its earnings missed
expectations.
(http://www.marketwatch.com/story/facebook-posts-huge-revenue-beat-2016-07-27)Shares
of Whole Foods Market Inc
(http://www.marketwatch.com/story/whole-foods-profit-falls-sales-slip-2016-07-27-18485051).(WFM)
plunged 9.2% after the upmarket grocer gave a weak forecast for the
current quarter as it booked a fourth-straight quarterly profit
fall on Wednesday.
GoPro Inc
(http://www.marketwatch.com/story/gopro-reports-loss-but-results-beat-estimates-2016-07-27).(GPRO)
swung to a loss, but results still beat expectations, and shares
jumped 9.4%. Groupon Inc
(http://www.marketwatch.com/story/groupon-shares-surge-as-results-top-expectations-2016-07-27-174852644).(GRPN)
soared 22.6% after posting better-than-expected results late on
Wednesday.
Weight Watchers International Inc
(http://www.marketwatch.com/story/weight-watchers-boosts-membership-by-nearly-5-2016-05-04).(WTW)
shares inched lower by 0.4% after exploding overnight with a 13%
premarket gain, after increasing its membership rolls for the first
time in four years.
After Thursday's close, Alphabet Inc.(GOOGL), Amazon.com
Inc.(AMZN), Expedia Inc.(EXPE) CBS Corp.(CBSA) are expected to
report earnings.
Read:Alphabet earnings bring concern about Google search growth,
revenue
(http://www.marketwatch.com/story/alphabet-earnings-bring-concern-about-google-search-growth-revenue-2016-07-26)
And: Here's what to expect from Amazon earnings
(http://www.marketwatch.com/story/what-to-watch-for-in-amazon-earnings-2016-07-25).
Other markets: The Nikkei 225 index
(http://www.marketwatch.com/story/asian-markets-fall-ahead-of-bank-of-japan-meeting-2016-07-27)
slipped 1.1% as investors stayed cautious about a potential
stimulus plan. The Bank of Japan will wrap up its policy meeting
Friday, and some investors expect it to join forces with the
government to announce a big batch of stimulus measures the same
day.
As the Nikkei fell, the yen moved up against rival currencies,
pushing the dollar
(http://www.marketwatch.com/story/dollar-pulls-back-vs-yen-as-investors-await-boj-outcome-2016-07-28)
lower.
Gold prices surged to $1,334 as some investors took the view
that the Fed really doesn't have the option to raise interest rates
in September.
Check out: Why gold prices spiked after the Fed decision
(http://www.marketwatch.com/story/why-gold-prices-spiked-after-the-fed-decision-2016-07-27)
European stocks struggled amid a batch of big earnings
(http://www.marketwatch.com/story/european-stocks-wobble-as-avalanche-of-earnings-reports-rolls-in-2016-07-28).
Read:Do the math--Brexit really is starting to bite at European
companies
(http://www.marketwatch.com/story/brexit-beats-oil-low-growth-as-hot-topic-during-europes-earnings-season-2016-07-28)
(http://www.marketwatch.com/story/brexit-beats-oil-low-growth-as-hot-topic-during-europes-earnings-season-2016-07-28)--Sara
Sjolin contributed to this article.
(END) Dow Jones Newswires
July 28, 2016 11:37 ET (15:37 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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