US Stocks Fall Amid Caterpillar, 3M Results as Metals Decline
New York (July 23) US stocks fell, extending declines to a third day, as results from 3M Co. and Caterpillar Inc. disappointed investors and commodities continued to slide.
3M and Caterpillar Inc. fell at least 3.5 percent after both cut their sales forecasts. Miner Freeport-McMoRan Inc. plunged 8.4 percent as copper fell to a two-week low. American Express Co. lost 3.3 percent after it said expenses are poised to rise. GM jumped 4.1 percent as rising truck sales boosted profits. SanDisk surged 17 percent after better-than-estimated earnings.
The Standard & Poor’s 500 Index fell 0.5 percent to 2,103.27 at 1:38 p.m. in New York, after its biggest two-day slide in two weeks. The Dow Jones Industrial Average declined 113.11 points, or 0.6 percent, to 17,737.93, while the Nasdaq Composite Index lost 0.4 percent.
“Investors have been somewhat surprised at how unimpressive earnings have been considering where the stock market is,” said Jeff Sica, who oversees over $1.5 billion as president and chief executive officer of Circle Squared Alternative Investments in Morristown, New Jersey. “Earnings have not proven to be the catalyst they’ve looked for. Investors are just very tentative.”
Caterpillar is selling fewer of its signature yellow diggers and dump trucks to miners amid the deepening slump in prices for copper, coal and iron ore. Sales of engines and generators to the energy industry also have been hurt by the slide in oil and natural gas prices.
Amazon.com Inc. and Starbucks Corp. are also among 54 S&P 500 companies due to report earnings today. Analysts now call for a 5.3 percent drop in second-quarter profit, shallower than July 10 estimates for a 6.4 percent decline.
Record Fail
The S&P 500 has gone without a fresh peak for the longest stretch since 2013, stuck in a pattern of nearing an all-time high without breaking it for two months now. The gauge is 1.2 percent away from its May record, after sliding as much as 4 percent from the high as concerns about Greece’s debt crisis and China’s stock market rout weighed on sentiment.
Investors are also watching economic reports for clues on when the Federal Reserve will start raising interest rates. Data today showed jobless claims plunged to the lowest level in four decades. A separate report said the index of U.S. leading economic indicators climbed more than forecast in June as historically low borrowing costs and a rebound in housing propelled growth.
Materials Slump
Economists surveyed by Bloomberg put odds for a September Fed rate increase at 50 percent, exactly where they were in June. The outlook for a September move remained intact even as crises in Greece and China temporarily rocked markets and dimmed global economic prospects.
The Chicago Board Options Exchange Volatility Index rose 5.6 percent Thursday to 12.80. The gauge, know as the VIX, is up 7.1 percent for the week after it tumbled 29 percent last week, the biggest such slide since January.
Utility and raw-material companies fell the most as all of the S&P 500’s 10 main groups retreated. Freeport-McMoRan sank 8.4 percent, even as the miner’s quarterly profit exceeded analysts’ estimates, with commodities continuing to slide. Dow Chemical Co. lost 4.5 percent, the most this year, as second-quarter sales were below estimates.
Railroads Fall
Transportation companies sank for the third time in four days, with Union Pacific Corp. dropping 4.8 percent, the most since November. The railroad’s chief financial officer said profits this year are unlikely to grow after 2014’s record. Kansas City Southern and Norfolk Southern Corp. slipped at least 1.9 percent. The Dow Jones Transportation Average lost 1.8 percent.
The technology group erased earlier gains, after a brief rebound from the worst drop in two weeks. Qualcomm Inc. fell 5 percent after posting its worst sales decline since 2009, helping to offset SanDisk’s rally. Google Inc. and Facebook Inc. declined more than 1.5 percent. Apple added 0.3 percent, trimming an earlier 1.5 percent climb, after its biggest slide in almost 18 months.
Semiconductors still climbed for the first time in five sessions as Skyworks Solutions Inc. and Micron Technology Inc. rallied more than 3.1 percent. Texas Instruments Inc. gained 2.2 percent.
SOURCE: BLOOMBERG
