Wall Street cedes ground
Wall Street suffers its first loss in four sessions after a mixed bag of quarterly reports.
|||New York - Wall Street suffered its first loss in four sessions on Thursday after a mixed bag of quarterly reports and a warning by Verizon Communications that a strike by workers would likely impact its bottom line.
The benchmark S&P 500 index in recent days had rallied to within 1 percent of its May record high, buoyed by a softer dollar and recovering crude prices. But investors had little patience for quarterly scorecards failing to meet already toned-down expectations.
“Earnings have been decent, outperforming, but outperforming expectations that have been dramatically lowered,” said Charlie Johnson, a sales trader at Greentree Brokerage Services in Philadelphia. “So it's like a shell game.”
Crude fell about 1 percent, but hovered near five-month highs after the International Energy Agency said 2016 would see the biggest fall in non-OPEC production in 25 years. Oil and US stock prices have been moving in lockstep for several months.
Verizon's shares dropped 3.32 percent after the telecom said a strike by its wireline workers would likely hurt earnings this quarter.
The Dow Jones industrial average declined 0.63 percent to end at 17,982.52 points and the S&P 500 lost 0.52 percent to 2,091.48.
The Nasdaq Composite edged down 0.05 percent to 4,945.89.
Nine of the 10 major S&P sectors fell, with the telecom sector down 2.74 percent, thanks largely to Verizon.
After the bell, Google parent-company Alphabet, Microsoft, Visa and Starbucks all posted disappointing quarterly reports, sending their stocks down more than 4 percent.
During the session, Travelers fell 6.05 percent after the property and casualty insurer reported a 17 percent fall in profit. The stock was the biggest drag on the Dow.
Of the S&P companies that have reported so far for the first quarter, 77 percent have beaten profit estimates, compared with the 63 percent that surprise in a typical quarter, according to Thomson Reuters I/B/E/S.
S&P 500 companies are expected to post a 7.2 percent fall in profit on average, and then a less drastic 2.6 percent dip in the second quarter.
“We think the market has already discounted the weak first quarter and possibly even some negative earnings in the second quarter,” said Paul Christopher, head global market strategist at Wells Fargo Investment Institute. “If the second quarter were as disappointing as the first quarter, you'd see another downturn.”
American Express shares climbed 0.91 percent after revenue rose for the first time in five quarters, while Mattel sank 5.78 percent after sales fell.
Under Armour rose 6.78 percent, while General Motors added 1.46 percent after both reported better-than-expected profits.
Declining issues outnumbered advancing ones on the NYSE by 1,897 to 1,095. On the Nasdaq, 1,493 issues fell and 1,311 rose.
The S&P 500 index showed 10 new 52-week highs and no new lows, while the Nasdaq recorded 47 new highs and 19 lows.
About 7.3 billion shares changed hands on US exchanges, above the 6.8 billion daily average for the past 20 trading days, according to Thomson Reuters data.
REUTERS