Stocks drop on lower earnings
By The Associated Press
Published: Wednesday, Oct. 23, 2013, 7:12 p.m.
NEW YORK — A four-day streak of record closes ended for the Standard & Poor's 500 index on Wednesday as Caterpillar reported weak earnings and falling oil prices hurt energy stocks.
Caterpillar, which makes mining and construction equipment, is considered an important barometer of the global economy. The plunge in Caterpillar's third-quarter profit discouraged investors and stalled a two-week surge in the stock market. Energy stocks dropped as the price of oil fell to its lowest in almost four months.
The S&P 500 fell 8.29 points, or 0.5 percent, to 1,746.38, ending its longest streak of record closes since mid-May.
The S&P 500 had surged 6 percent over the previous two weeks, capped by a record close of 1,754.67 on Tuesday. The index climbed as lawmakers inched toward a deal to end a 16-day partial government shutdown and avert a potential U.S. default. Investors became more convinced that the Federal Reserve would refrain from pulling back on its economic stimulus until possibly next year.
“We need to let a little bit of air out of the balloon here,” said Alec Young, a global equity strategist at S&P Capital IQ. “We've seen a huge rally, so there's a bit of short-term exhaustion.”
Energy stocks fell the most of the 10 industry groups in the S&P 500. The price of oil slipped $1.44, or 1.5 percent, to $96.86 a barrel, on higher supplies of U.S. oil and weak demand for fuel.
Along with weaker earnings, Caterpillar issued a lower profit forecast. Its stock dropped $5.41, or 6.1 percent, to close at $83.76.
Broadcom was another company that disappointed Wall Street. Shares of the communications chip maker fell 78 cents, or 2.9 percent, to $26.36. On Tuesday, the company gave a disappointing revenue outlook for the fourth quarter. Also weighing on the stock was Apple's decision not to include a new wireless computer networking standard in its latest iPad model.
It wasn't all bad news from corporate America.
Boeing raised its profit estimate for the full year because deliveries of commercial planes continue to accelerate. The plane maker's stock climbed $6.54, or 5.3 percent, to $129.02.
In other trading on Wednesday, the Dow Jones industrial average fell 54.33 points, or 0.4 percent, to 15,413.33. The index of 30 leading companies hasn't rallied like the S&P 500 index and remains 263 points below its closing high reached on Sept. 18.
The Nasdaq composite dropped 22.49 points, or 0.6 percent, to 3,907.07, ending a five-day streak of higher closes.
About sixty percent of the companies in the S&P 500 that have reported third-quarter earnings have beaten analysts' forecasts, according to data from S&P Capital IQ.
“Obviously, we've had one casualty today with Caterpillar, but so far, most companies have beaten market expectations,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
S&P 500 companies are expected to report earnings growth of 3.5 percent for the July-to-September quarter over the same period a year earlier. Revenue is expected to rise by 3.9 percent.
In government bond trading, the yield on the 10-year Treasury note eased to 2.50 percent from 2.51 percent late Tuesday.
The yield, which is used to set interest rates on many kinds of loans including mortgages, is the lowest it's been since mid-July. It has fallen 0.5 percent since reaching a high for the year of 3 percent on Sept. 5.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Marcellus shale driller Noble Energy Inc. sinks roots into Pittsburgh
- Dick’s Sporting Goods usiness brisk while American Eagle feels chill in profits
- ‘Fresher, different, lot more fun’ guide changes at Kings Family Restaurants
- Profit falls at American Eagle Outfitters on sales decline, charges
- Minorities crucial to filling Marcellus shale gas drilling jobs
- Diaper makers do due diligence
- Harsh winter sets back Western Pa. maple harvest
- Achieving proper credit balance
- Alpha Natural Resources to pay record $227.5M in water pollution settlement
- Sbarro again files for bankruptcy reorganization
- Weather worsens McDonald’s sales struggles