Stocks Decline on Disappointing Earnings, Lower Oil
October 26 2016 - 10:11AM
Dow Jones News
By Mike Bird
Stocks declined Wednesday amid a string of disappointing
earnings reports from large U.S. companies and a drop in oil
prices.
The Dow Jones Industrial Average dropped 91 points, or 0.5%, to
18078 shortly after the opening bell. The S&P 500 declined
0.5%, and the Nasdaq Composite fell 0.6%.
The Stoxx Europe 600 index pulled back 0.9%, led by a 1.4% drop
in the U.K.'s FTSE 100 index and a 1% decline in Germany's DAX.
U.S. crude fell back below $50 a barrel, down by 1.9% at $49.02.
Energy companies led the fall in the S&P 500, off 0.7%.
Oil prices remain higher than they were at the end of September,
when oil-producing cartel the Organization of the Petroleum
Exporting Countries announced in Algiers a prospective deal to cut
output.
"The oil market generally has been characterized by the supply
side in recent years, and the Algiers meeting provided a bit of
rhetoric from OPEC saying they'd be more aware of prices," said
Nandini Ramakrishnan, global market strategist at J.P. Morgan Asset
Management. "Our longer-term view is that we should see a higher
oil price next year."
Apple shares dropped 4.1% after the iPhone maker reported its
first annual revenue decline in 15 years. Edwards Lifesciences fell
16% after the medical device maker reported lower-than-expected
sales of its minimally invasive heart valves in the third
quarter.
Consumer confidence data from Germany issued early Wednesday
showed slightly weaker sentiment than expected at 9.7, its lowest
reading since June and below the 10 that analysts had forecast.
"Despite a somewhat more downbeat outlook for personal finances,
consumers assessed that economic prospects had improved, with the
relevant indicator rising to the highest level in more than a
year," said Mantas Vanagas, economist at Daiwa Capital Markets
Europe.
Meanwhile, French consumer sentiment in October, recorded by
statistical agency INSEE, showed the joint-strongest confidence
level since 2007. The index rose to 98, but was still below 100,
the long-term average level since 1987.
Asian stocks closed broadly lower, with Hong Kong's Hang Seng
down 1%, and China's Shenzhen A-share index down 0.4%. Japanese
equities bucked the trend with the Nikkei 225 index closing up
slightly.
After falling by as much as 1.3% against the dollar intraday
Tuesday, sterling was mixed Wednesday, up 0.2% against the dollar
at $1.219, but down slightly against the euro at EUR1.117.
"With the terms and conditions of the U.K.'s future trade links
still unclear it is too early to rule out further downside risks in
sterling," said Geoffrey Yu, head of UBS Wealth Management's U.K.
investment office. Mr. Yu believes sterling could fall to as low as
$1.10 temporarily over the next year.
Bond yields in developed markets also picked up during the
European morning. U.K. 10-year gilt yields rose to 1.14%, from
1.11% on Tuesday. German 10-year yields rose to 0.57%, from around
0.22% on Tuesday.
Write to Mike Bird at Mike.Bird@wsj.com
(END) Dow Jones Newswires
October 26, 2016 09:56 ET (13:56 GMT)
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