Dow falls 128, with Chevron and Alcoa leading way
NEW YORK — Downbeat reports from Alcoa and Chevron at the start of corporate earnings season pulled stock indexes lower for a third straight day Wednesday. The Dow Jones industrial average slumped 128 points, its steepest loss since late June.
Alcoa, the aluminum producer, beat Wall Street's earnings estimates on Tuesday night but said it expects a slowdown in China to weaken demand for aluminum. Its stock fell 42 cents Wednesday to $8.71.
The company is often used as a weather vane for the global economy. “And judging by Alcoa's massive inventory of aluminum, it seems pretty anemic,” said Jack Ablin, chief investment officer at Harris Private Bank.
Chevron, the country's second-largest oil company, warned late Tuesday that slumping oil prices and production would cause earnings to be “substantially lower.” It blamed Hurricane Isaac for disrupting production at a Mississippi refinery.
On Tuesday, the Supreme Court also refused to block a $19 billion judgment levied against Chevron by an Ecuadorian court for polluting the Amazon. Chevron's stock sank $4.91 to $112.45.
The Dow fell 128.56 points to close at 13,344.97, just shy of 1 percent, its fourth straight drop and the largest point decline since June 25. Chevron alone pulled the Dow down 38 points.
The Standard & Poor's 500 index fell 8.92 points to 1,432.56.
Alcoa and Chevron's results were an unpromising start to the third-quarter earnings parade, said JJ Kinahan, chief derivatives strategist at Ameritrade. “It's beginning to look like we might have a lot of gloom-and-doom earnings calls this quarter,” he said.
Of the 10 industry groups within the S&P 500, all but financials fell. Energy and materials stocks, whose fortunes hinge on economic growth, slumped the most. Bank stocks ended the day flat.
In other trading, the Nasdaq lost 13.24 points to 3,051.78. The yield on the benchmark 10-year Treasury slipped to 1.68 percent, down from 1.71 percent late Tuesday.
In one of the few economic reports out Wednesday, the Federal Reserve said the economy “expanded modestly” from mid-August through September. The survey, known as the Beige Book, pointed to improvements in housing car sales, manufacturing and the housing market.
Employment and consumer spending, however, remained mostly flat.
Wal-Mart Stores surged $1.28 to $75.42, and earlier touched an all-time high of $76.81. The president of its U.S. division told Wall Street analysts that the retail giant plans to open more small-scale stores to compete with discount retailers and drugstore chains.
Alcoa's earnings report marks the unofficial start to the quarterly earnings season, expected to be the worst in three years. Analysts project that companies in the S&P 500 will say third-quarter earnings shrank 1 percent compared with the same quarter of last year.
Ablin said investors need solid reasons to buy stocks now “My sense is that, with these downbeat earnings announcements, there's not much around right now,” he said.
Concerns over the global economy helped knock the Dow down 110 points on Tuesday. The International Monetary Fund trimmed its forecast for worldwide growth, saying that trouble in Europe and other developed regions has spread to faster-growing developing countries. The day before, the World Bank cut its estimate for growth in China, the world's second-largest economy behind the U.S., and countries across Asia.
For the week, the Dow and S&P 500 have each lost 1.9 percent, and the Nasdaq has lost 2.7 percent.
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.
- Penguins GM insists coach Johnston was no afterthought
- Pirates down Cardinals, inch closer in wild-card chase
- Pirates notebook: McCutchen returns to starting lineup; Alvarez out
- For Steelers outside linebacker Jones, size is not an obstacle
- URA drops Philly developer, cites delays on Garden Theater block project
- Foundations reject overture from developer on August Wilson Center
- Dunbar continues clean-up efforts after flood
- No injuries after Greensburg-Salem school bus accident in Murrysville
- Coast Guard fires in defense on Iran boat
- Duquesne will open A-10 play on national television
- Steelers cornerbacks Allen, Gay, Taylor have something to prove