TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Stocks drop on lower earnings

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

By The Associated Press
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

Most-Read Business Headlines

  1. Energy sector adjusts to global oil plummet
  2. New York farmers lament lost opportunity for gas riches
  3. U.S. coal mines nearing record low in worker deaths
  4. ‘Staff Pick’ is golden ticket on Kickstarter
  5. Drought opens Texas ranchers’ eyes to income options
  6. Natural gas groups says increase in Pennsylvania taxes would bring dire results for economy
  7. Kim Komando: Can you get a virus on your smartphone?
  8. Real estate union: Howard Hanna buys Langholz Wilson Ellis
  9. Agriculture prospects envisioned in Cuba
  10. Mind the time: Optimize last-minute shopping
  11. EDMC accused in GI Bill scheme
Subscribe today! Click here for our subscription offers.