Share

Wall Street ends down on weak earnings

New York - US stocks fell on Wednesday as shares of heavy-equipment maker Caterpillar and semiconductor companies tumbled after they reported earnings, ending the S&P 500's four-session streak of record high finishes.

Results from Caterpillar and Boeing, two Dow components, illustrated the quarter's mixed picture of corporate results and outlooks, which have some investors worried.

Caterpillar was one of the biggest decliners on the S&P, slumping 6.2% to $83.62 after the manufacturer cut its full-year outlook for a third time and its profit missed expectations. That sent shares tumbling by the most in a day since September 2011.

"There's not a lot of room for error as earnings are growing at such a slow pace, particularly for a globally focused company like Caterpillar, which has been a proxy for global GDP in global markets," said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank.

"It's no secret the rest of the world has suffered, so therefore a company like Caterpillar is going to suffer."

On the upside, Boeing surged 5.3% to $129.02 after airplane maker reported a rise in adjusted profit and raising its full-year forecast.

After the market closed, AT&T reported revenue that was slightly below Wall Street's estimates, according to Thomson Reuters I/B/E/S.

About one-third of S&P 500 companies have reported thus far, with 66.35% topping profit expectations, a rate slightly higher than the historical average. Roughly 54% have beaten on revenue, below the 61% long-term average. Investors worry that much of the growth in earnings has not been generated by revenue.

"Finally the markets are focused on earnings after having been focused on many other things," Davidson, who called third quarter results released so far "tepid."

The semiconductor sector dropped 3.4% a day after Broadcom, Altera and RF Micro Devices joined Intel and Texas Instruments in lowering their forecasts.

Broadcom shares fell 2.9% to $26.36, Altera lost 13.5% to $32.30 and RF Micro lost 8.6% to $5.63.

The Dow Jones industrial average was down 54.40 points, or 0.35%, at 15,413.26. The Standard & Poor's 500 Index was down 8.31 points, or 0.47%, at 1,746.36. The Nasdaq Composite Index was down 22.49 points, or 0.57%, at 3,907.07.

The S&P 500 closed at an all-time high on Tuesday, its fourth-straight record finish. The index is up 22% for the year up to Tuesday, not far from the 23.5% advance in 2009.

On Wednesday, 53% of total shares traded were declining.

Global equity markets weakened as China's primary short-term money rates rose on concerns the People's Bank of China may tighten its cash supply to counter inflation risks, which could hurt growth in the world's second-largest economy.

Also weighing on sentiment, the European Central Bank said it would put major eurozone banks through rigorous tests next year to build confidence in the sector. Some analysts said that if the review reveals unexpected problems, investor confidence could be undermined.

Netflix shares were up 2.4% to $330.24 following a large selloff on Tuesday when billionaire investor Carl Icahn cut his stake in the company.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.05
-0.8%
Rand - Pound
24.04
-0.6%
Rand - Euro
20.55
-0.4%
Rand - Aus dollar
12.37
-0.2%
Rand - Yen
0.13
-0.7%
Platinum
901.20
+0.5%
Palladium
997.97
-0.4%
Gold
2,206.11
+0.5%
Silver
24.64
-0.0%
Brent Crude
86.09
-0.2%
Top 40
68,067
+0.6%
All Share
74,267
+0.5%
Resource 10
56,746
+2.0%
Industrial 25
103,647
+0.4%
Financial 15
16,482
-0.3%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders