Stocks Waver as Investors Focus on Earnings
October 24 2019 - 11:52AM
Dow Jones News
By Michael Wursthorn and Avantika Chilkoti
The S&P 500 struggled to gain traction Thursday, as
investors contended with a mixed bag of corporate profit reports
that offered a murky outlook on the state of the U.S. economy.
Although the broad index bobbed around the flatline, the tepid
move overshadowed bigger swings in shares of individual companies
that reported quarterly earnings late Wednesday and Thursday
morning. So far, the gains and losses piled up to leave the S&P
500 roughly where it was the day before.
On one end, shares of Twitter, 3M, Ford and eBay all suffered
steep declines after reporting disappointing earnings, weighing on
the S&P 500. On the other end, shares of PayPal Holdings,
Microsoft and semiconductor company Lam Research notched solid
gains after topping Wall Street's expectations.
The S&P 500 added 0.1% in recent trading, while the Nasdaq
Composite rose 0.6%. The Dow Jones Industrial Average, meanwhile,
continued to underperform broader benchmarks, falling 62 points, or
0.2%, to 26771 in recent trading, due to the pullback in 3M
shares.
The latest earnings reports likely did little to shore up
confidence in the U.S. economy. Growth is clearly weakening, as
companies including Ford and 3M deal with the ongoing effects of
the U.S.'s trade war against China.
A measure of business investment added to Thursday's gloomy
economic picture after the Commerce Department said orders for
long-lasting goods fell in September, snapping three straight
months of gains.
And although most companies in the S&P 500 have topped
analysts' expectations so far, the broad index remains on pace to
notch a 4.1% contraction in third-quarter earnings from a year
earlier, according to FactSet.
Shares of 3M fell 4.3%, dragging the Dow industrials firmly
lower in early-morning trading. The industrial conglomerate posted
lower quarterly sales in some of its core divisions and cut its
earnings forecast for the rest of the year.
Twitter dropped 19% after the social-media company's
third-quarter earnings fell short of expectations. Its
fourth-quarter revenue forecast also disappointed the market.
EBay also fell, shedding 7.6%, after the online marketplace
forecast its first quarterly revenue decline in four years. Ford
shares dropped 6.5% after the car maker lowered its profit target
for the year, sparking worries that a broad restructuring at the
company isn't succeeding in driving earnings growth.
And Baxter International declined 6.9% after the health-products
company said it may need to restate results for at least five
years.
Some of those losses were offset by companies that reported more
upbeat results.
Microsoft reported late Wednesday stronger-than-expected
earnings and revenue, in part due to the company's bet on cloud
computing. Shares jumped 1.8%
PayPal, meanwhile, said results for its latest quarter topped
expectations, sending shares up 7.3%, putting it among the S&P
500's strongest performers.
Shares of Tesla, which isn't in the S&P 500, posted a big
gain after the electric-car maker surprised investors by reporting
a profit for the third quarter, allaying fears that it was
prioritizing growth and production over profit. Shares climbed
16%.
Elsewhere, the Stoxx Europe 600 index rose 0.5% after the
European Central Bank decided to leave interest rates unchanged and
stuck with a plan to start buying bonds next month.
Other central banks also took action Thursday. Bank Indonesia
cut interest rates by a further 25 basis points, sending the rupiah
down 0.5% on the dollar. Meanwhile, Turkey's central bank surprised
markets with a bigger-than-expected cut to its key repo rate,
sending the lira down 0.4%. The Norwegian and Swedish central banks
held their benchmark rates unchanged.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com and
Avantika Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
October 24, 2019 11:37 ET (15:37 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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