By Sue Chang, MarketWatch , Ryan Vlastelica
Boeing rallies after strong quarter and outlook
U.S. stocks retreated Wednesday on the back of a sharp decline
by shares of Apple, the largest U.S. company by market cap, and as
a rebound by crude oil fizzled.
Major indexes opened broadly lower. Apple led the decline, and
while it continued to see its biggest one-day drop since June, the
broader market at one point recovered alongside energy stocks
before losing upside momentum. December West Texas Intermediate
crude slid 1.4%.
The oil-price bounce came after the Energy Information
Administration reported domestic crude supplies unexpectedly fell
in the latest week
(http://www.marketwatch.com/story/oil-prices-turn-higher-after-eia-reports-unexpected-600000-million-barrel-decline-in-us-crude-supply-2016-10-26),
a positive sign for a market that continues to struggle with
oversupply.
The S&P 500 slipped 6 points, or 0.3%, to 2,136, while the
Dow Jones Industrial Average edged up 4 points to 18,174. The
Nasdaq Composite Index , which is heavily weighted toward
technology names, fell 38 points, or 0.7%, to 5,245.
Wednesday's trading was the latest session in which overall
market activity, at least in terms of swings for the major indexes,
was extremely quiet.
(http://www.marketwatch.com/story/the-stock-market-has-reached-a-historic-level-of-quiet-2016-10-26)See:The
stock market has reached a historic level of quiet
(http://www.marketwatch.com/story/the-stock-market-has-reached-a-historic-level-of-quiet-2016-10-26)
Apple Inc.(AAPL) sank 2.8% a day after the iPhone maker posted
quarterly earnings
(http://www.marketwatch.com/story/apple-revenue-dips-but-rebound-expected-2016-10-25)
that slightly beat expectations and revenue that was just shy of
forecasts. Investors also may have been disappointed that the tech
giant's projections for the current quarter weren't more bullish.
The day's decline was on track to be Apple's biggest one-day drop
since April and follows a rally that lifted the share price nearly
15% between early September and Tuesday.
"The quarter wasn't bad to me, but if you're going to report a
quarter after a [share] rise of this much in this short of time,
then it has to be a powerful one. Instead, this was just lukewarm,"
said Michael Binger, senior portfolio manager at Gradient
Investments LLC, which counts Apple as a holding.
"We continue to like the stock, and think the next 12 months
will see a big replacement cycle for the iPhone."
Read:Apple forecast disappoints, but shares are still a bargain,
analysts say
(http://www.marketwatch.com/story/apple-forecast-disappoints-but-shares-are-still-attractive-analysts-say-2016-10-26)
See also:This key Nasdaq gauge is topping out and Apple isn't
helping
(http://www.marketwatch.com/story/a-key-nasdaq-gauge-is-peaking-as-apple-starts-to-look-mushy-2016-10-26)
Analyst Amit Daryanani at RBC Capital Markets LLC believes the
selloff will result in an attractive entry point for investors to
buy Apple given the company's fundamentals remain intact.
Apple's results overshadowed better-than-expected results
(http://www.marketwatch.com/story/boeings-stock-surges-after-profit-rises-well-above-expectations-2016-10-26)
from Boeing Co.(BA), which rallied 4.3% after also raising its
outlook. Both companies are Dow components.
The market weakness on Wednesday comes after a downbeat day on
Tuesday
(http://www.marketwatch.com/story/us-stock-futures-point-to-gains-as-apple-set-to-take-the-spotlight-2016-10-25)
when worries about a string of lackluster earnings and a drop in
consumer sentiment sent major indexes lower.
However, gains in the S&P 500 financial sector, which
climbed as expectations for an interest-rate hike mounted, offset
some of the broader market's drop.
"The financial names are enjoying the move higher as the 10-year
Treasury yield climbs in anticipation of a December Federal Reserve
rate hike," said Quincy Krosby, market strategist at Prudential
Financial.
The yield on the 10-year U.S. Treasury note rose 3.1 basis
points to 1.788%, according to FactSet.
The probability of a Fed hike in November is low at only 8.3%,
according to the CME Group's Fed Watch tool
(http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html),
which measures pricing in the Fed funds futures market. However,
for December the tool is pointing to an almost 80% chance of a rate
increase.
Read:Yellen, global central bankers not 'singing from the same
song sheet'
(http://www.marketwatch.com/story/yellen-global-central-bankers-not-singing-from-same-song-sheet-2016-10-26)
In the latest economic data, new home sales
(http://www.marketwatch.com/story/new-home-sales-run-at-annual-593000-rate-in-september-as-market-grinds-slowly-higher-2016-10-26)
picked up in September, but hefty downward revisions to sales in
earlier months point to a market still struggling for momentum.
Corporate news: Among other earnings, Southwest Airlines
Co.(LUV) slumped 7.5% after the carrier reported a drop in
third-quarter profit and revenue
(http://www.marketwatch.com/story/southwest-airlines-shares-climb-after-earnings-beat-2016-10-26).
Chipotle Mexican Grill Inc.(CMG) skidded 9.6% after the burrito
chain late Tuesday reported a 95% slump in third-quarter profit
(http://www.marketwatch.com/story/chipotle-gives-optimist-outlook-profit-down-95-2016-10-25).
Pandora Media Inc.(P) shed 4.8% after the internet radio company
recorded another quarter of losses
(http://www.marketwatch.com/story/pandora-shares-slump-on-third-quarter-loss-2016-10-25).
On the upside, Twitter Inc.(TWTR) gained 0.6% following
speculation that Walt Disney Co.(DIS) has taken renewed interest in
buying the social media company
(http://www.marketwatch.com/story/twitter-shares-jump-on-rumor-of-renewed-disney-interest-2016-10-25).
Tesla Motors Inc.(TSLA) and Texas Instruments Inc.(TXN) are due
to report after the market close.
Read:Tesla third-quarter earnings--what to expect
(http://www.marketwatch.com/story/tesla-third-quarter-earnings-what-to-expect-2016-10-17)
Other markets: Stocks in Asia closed mostly lower
(http://www.marketwatch.com/story/australian-wipeout-leads-asian-market-declines-2016-10-25),
and Europe followed suit with all major benchmarks mired in red
(http://www.marketwatch.com/story/european-stocks-down-for-third-straight-day-as-commodity-shares-pull-back-2016-10-26).
Metals traded mixed
(http://www.marketwatch.com/story/gold-futures-at-three-week-highs-as-dollar-stocks-wobble-2016-10-26),
with gold futures firming initially but now off 0.5% and silver
down 0.8%.
The ICE dollar index was mostly flat
(http://www.marketwatch.com/story/dollar-struggles-to-move-higher-aussie-dollar-surges-on-inflation-2016-10-26)
after touching its highest level in nearly nine months on
Tuesday.
--Sara Sjolin contributed to this report.
(END) Dow Jones Newswires
October 26, 2016 15:04 ET (19:04 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.