Earnings and credit jitters roil Wall Street
Earnings and credit jitters roil Wall Street
By Michael Mackenzie in New York
Copyright The Financial Times Limited 2007
Published: July 24 2007 14:01 | Last updated: July 24 2007 15:36
Wall Street was sharply lower at mid-morning on Tuesday after several companies missed their earnings estimates and the financials sector came under pressure as credit market jitters escalated.
Less than an hour after the opening bell, the S&P 500 index was 0.9 per cent lower at 1,527.33. Leading losses among the S&P’s major groups was financials, off 1.5 per cent, taking its decline for the year to 5.3 per cent. The S&P investment bank index slumped 1.9 per cent, its lowest level since mid March.
Sharply lower oil prices also roiled energy stocks.
The Nasdaq Composite was 1 per cent weaker at 2,663.76.
The Dow Jones Industrial Average was down 0.8 per cent at 13,831.98.
The yield on the 10-year bond was 2 basis points lower at 4.94 per cent as safe-haven buying boosted government debt prices.
Global markets were mixed in overnight trade. Asian bourses were mainly higher, led by Taiwan’s rise of 1.3 per cent. Meanwhile European markets were trading sharply weaker, with leading benchmarks lower by around 1.5 per cent after Wall Street’s poor start.
The second quarter earnings season is now in full swing with investors on Tuesday receiving a mixed bag of results.
While earnings growth is running at a 6.5 per cent expansion for the quarter so far, ahead of estimates, some analysts warn the pace is misleading.
“US economic weakness is beginning to show through with earnings in the consumer discretionary sector down 12.8 per cent so far,” said David Shairp, global strategist at JPMorgan Asset Management.
In earnings news a number of Dow stocks reported. Among them, AT&T said second quarter profit rose 61 per cent. Its stock was down 0.2 per cent at $39.95. Shares in Apple had slumped 3.7 per cent to $138.21, after the AT&T results noted weaker-than-expected demand for Apple’s iPhone.
Shares in Countrywide slumped 7.7 per cent to $31.43 after the largest lender of mortgages posted a 33 per cent slide in second quarter profits. The weaker housing market also prompted the bank to lower its 2007 outlook
Dupont reported a quarterly profit below estimates as higher energy costs and biotechnology research detracted from better sales. The stock was 4.8 per cent lower at $50.68.
McDonalds recorded a quarterly net loss, as the fast food chain took a charge over the sale of outlets in Latin America. Excluding that charge, results from McDonalds were in line with the upbeat forecast it announced last week. The stock was down 0.5 per cent at $52.23.
Late on Monday, American Express said its second quarter profit rose 12 per cent, and also boosted its provision for future credit losses. The stock was trading 3.5 per cent lower at $62.38.
In other results, UPS reported a 4.1 per cent rise in quarterly earnings. The outcome was modestly ahead of estimates, and the stock rose 0.9 per cent to $75.20.
CME Group reported a 15 per cent rise in quarterly results as the merger between the Chicago Board of Trade and Chicago Mercantile Exchange Holdings was completed. The stock was down 1.7 per cent at $550.18.
Pepsi said profits rose 13 per cent for the quarter and the stock was down 0.1 per cent at $34.98, in spite of an upbeat outlook.
In the defence realm, Lockheed Martin said its quarterly results jumped 34 per cent and beat estimates. The stock was up 4 per cent at $103.48. Northrop Grumman posted a 7 per cent gain in profits and upgraded guidance for the year. The stock fell 1.3 per cent to $78.07 at mid-morning.
Shares in Eli Lilly were up 2.1 per cent at $58.38 after its second-quarter profit declined 19 per cent due to charges for recent acquisitions. Excluding the charge, the results beat estimates and the pharmaceutical also raised its outlook.
Texas Instruments posted lower quarterly profit and revenue. The chip maker was down 3.9 per cent at $36.70.
Results from Amazon are due after the closing bell. Boeing and Apple follow on Wednesday.
Stocks rallied on Monday, boosted by better-than-expected second quarter earnings reports and fresh merger activity. The S&P was 0.5 per cent higher at 1,541.52 at the close in New York, while the Nasdaq Composite Index was 0.1 per cent firmer at 2,690.58
The Dow Jones Industrial Average was 0.7 per cent higher at 13,943.42.
The Russell 2000 index of smaller companies rose 4.81, or 0.58 per cent, to 841.25.
By Michael Mackenzie in New York
Copyright The Financial Times Limited 2007
Published: July 24 2007 14:01 | Last updated: July 24 2007 15:36
Wall Street was sharply lower at mid-morning on Tuesday after several companies missed their earnings estimates and the financials sector came under pressure as credit market jitters escalated.
Less than an hour after the opening bell, the S&P 500 index was 0.9 per cent lower at 1,527.33. Leading losses among the S&P’s major groups was financials, off 1.5 per cent, taking its decline for the year to 5.3 per cent. The S&P investment bank index slumped 1.9 per cent, its lowest level since mid March.
Sharply lower oil prices also roiled energy stocks.
The Nasdaq Composite was 1 per cent weaker at 2,663.76.
The Dow Jones Industrial Average was down 0.8 per cent at 13,831.98.
The yield on the 10-year bond was 2 basis points lower at 4.94 per cent as safe-haven buying boosted government debt prices.
Global markets were mixed in overnight trade. Asian bourses were mainly higher, led by Taiwan’s rise of 1.3 per cent. Meanwhile European markets were trading sharply weaker, with leading benchmarks lower by around 1.5 per cent after Wall Street’s poor start.
The second quarter earnings season is now in full swing with investors on Tuesday receiving a mixed bag of results.
While earnings growth is running at a 6.5 per cent expansion for the quarter so far, ahead of estimates, some analysts warn the pace is misleading.
“US economic weakness is beginning to show through with earnings in the consumer discretionary sector down 12.8 per cent so far,” said David Shairp, global strategist at JPMorgan Asset Management.
In earnings news a number of Dow stocks reported. Among them, AT&T said second quarter profit rose 61 per cent. Its stock was down 0.2 per cent at $39.95. Shares in Apple had slumped 3.7 per cent to $138.21, after the AT&T results noted weaker-than-expected demand for Apple’s iPhone.
Shares in Countrywide slumped 7.7 per cent to $31.43 after the largest lender of mortgages posted a 33 per cent slide in second quarter profits. The weaker housing market also prompted the bank to lower its 2007 outlook
Dupont reported a quarterly profit below estimates as higher energy costs and biotechnology research detracted from better sales. The stock was 4.8 per cent lower at $50.68.
McDonalds recorded a quarterly net loss, as the fast food chain took a charge over the sale of outlets in Latin America. Excluding that charge, results from McDonalds were in line with the upbeat forecast it announced last week. The stock was down 0.5 per cent at $52.23.
Late on Monday, American Express said its second quarter profit rose 12 per cent, and also boosted its provision for future credit losses. The stock was trading 3.5 per cent lower at $62.38.
In other results, UPS reported a 4.1 per cent rise in quarterly earnings. The outcome was modestly ahead of estimates, and the stock rose 0.9 per cent to $75.20.
CME Group reported a 15 per cent rise in quarterly results as the merger between the Chicago Board of Trade and Chicago Mercantile Exchange Holdings was completed. The stock was down 1.7 per cent at $550.18.
Pepsi said profits rose 13 per cent for the quarter and the stock was down 0.1 per cent at $34.98, in spite of an upbeat outlook.
In the defence realm, Lockheed Martin said its quarterly results jumped 34 per cent and beat estimates. The stock was up 4 per cent at $103.48. Northrop Grumman posted a 7 per cent gain in profits and upgraded guidance for the year. The stock fell 1.3 per cent to $78.07 at mid-morning.
Shares in Eli Lilly were up 2.1 per cent at $58.38 after its second-quarter profit declined 19 per cent due to charges for recent acquisitions. Excluding the charge, the results beat estimates and the pharmaceutical also raised its outlook.
Texas Instruments posted lower quarterly profit and revenue. The chip maker was down 3.9 per cent at $36.70.
Results from Amazon are due after the closing bell. Boeing and Apple follow on Wednesday.
Stocks rallied on Monday, boosted by better-than-expected second quarter earnings reports and fresh merger activity. The S&P was 0.5 per cent higher at 1,541.52 at the close in New York, while the Nasdaq Composite Index was 0.1 per cent firmer at 2,690.58
The Dow Jones Industrial Average was 0.7 per cent higher at 13,943.42.
The Russell 2000 index of smaller companies rose 4.81, or 0.58 per cent, to 841.25.
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