Stocks Slip to Start the Week on Disappointing Earnings
October 23 2017 - 05:50PM
Dow Jones News
By Akane Otani and Riva Gold
-- U.S. stocks fall after slew of earnings reports
-- Nikkei on record streak after Japan elections
-- European stocks edge higher
A flurry of downbeat updates from American companies dragged
down U.S. stocks Monday.
Major indexes were little changed in early trading then slid
into the close, with the Dow Jones Industrial Average ending at its
session low.
Still, stocks have been generally resilient. Monday's modest
decline of 0.2% for the blue-chip index was its biggest since early
September.
Analysts and investors have attributed the stability to a period
of solid earnings and economic growth.
Many expect corporate news to drive much of the action in the
coming days, with nearly 200 companies in the S&P 500 on this
week's earnings calendar, according to FactSet.
"Listening to companies on their earnings calls, I think the
general trend is still looking pretty positive," said Jeremy Bryan,
a portfolio manager at Gradient Investments.
While some sectors like the insurance industry are expected to
report weaker results than in previous years, partially because of
damage from hurricanes earlier this year, "we're looking through
the one-time hits and still expecting robust growth into 2018," Mr.
Bryan said.
The Dow industrials fell 54.67 points to 23273.96. The S&P
500 dropped 10.23 points, or 0.4%, to 2564.98 and the Nasdaq
Composite declined 42.23 points, or 0.6%, to 6586.83. All three
indexes closed at records on Friday.
Hasbro shares shed $8.44, or 8.6%, to $89.75 after the toy maker
posted earnings and sales results that beat analysts' expectations,
but gave a downbeat projection for sales in the key holiday
period.
Shares of Mattel, a rival toy maker, dropped 51 cents, or 3.2%,
to 15.46.
State Street, which posted better-than-expected earnings but
reported foreign-exchange trading results that disappointed some
analysts, fell 2.95, or 3%, to 96.17.
General Electric slid 1.51, or 6.3%, to 22.32, and posted its
biggest one-day percentage decline since August 2011 after several
analysts cut their price targets for the stock following the
company's latest earnings report, which slashed 2017
projections.
GE's stock has fallen 29% so far this year, putting it on pace
for its worst year since 2008.
Elsewhere, the Stoxx Europe 600 rose 0.2% as gains in technology
companies offset declines in the banking sector.
Investors this week will be watching closely for the European
Central Bank's plans to announce the fate of its giant bond-buying
program at its meeting on Thursday.
This "may be a potential turning point in the timeline for
withdrawing accommodation," said Holly MacDonald, chief investment
strategist at Bessemer Trust, noting the European Central Bank is
facing constraints on continuing its program of quantitative
easing.
Still, with the move well-telegraphed to markets and no interest
rate increase on the horizon for some time, the ECB's October
meeting is unlikely to ruffle bond markets much, she said.
U.S. government bonds strengthened Monday, with the yield on the
benchmark 10-year U.S. Treasury note falling to 2.375% from 2.381%
on Friday. Yields fall as bond prices rise.
In Asia, Japan's Nikkei Stock Average rose 1.1%, rounding out
its longest-ever winning streak with a 15th session of consecutive
gains, after Japanese Prime Minister Shinzo Abe won a national
election by a landslide.
Hong Kong's Hang Seng Index reversed its opening gains to trade
down 0.6% as investors turned cautious on Chinese banks ahead of
their earnings releases this week and declines in property stocks
weighed on the index.
Write to Akane Otani at akane.otani@wsj.com and Riva Gold at
riva.gold@wsj.com
(END) Dow Jones Newswires
October 23, 2017 17:35 ET (21:35 GMT)
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