Q1 Earnings and Geopolitical Uncertainty Weigh on Wall Street
US stocks declined today, weighed down by drops in Goldman Sachs and Johnson & Johnson in the wake of their quarterly results, while geopolitical tensions and disarray continued to fuel investor caution.
By Paolo Palazzi-Xirinachs
Tuesday, April 18, 2017 - 00:00
Goldman Sachs lost 4.7 percent to $215.58 after hitting its lowest level since Nov. 29 following earnings that missed expectations as trading revenue dropped. Goldman shares were on track for their biggest daily percentage drop since June 24, a day after Britain voted to leave the European Union. And Johnson & Johnson slumped 3.3 percent and was on pace for its worst day in over eight years after the company's quarterly revenue fell short of analysts' expectations. Both companies tend to be known for managing their earnings a little better, than most. The fact they have missed perhaps isn’t a very good indication.
The Dow Jones Industrial fell 109.25 points, or 0.53 percent, to 20,527.67, the S&P 500 lost 6.25 points, or 0.27 percent, to 2,342.76 and the Nasdaq dropped 10.11 points, or 0.17 percent, to 5,846.68.
There seems to be some nervousness out there about the economy, geopolitical issues and general unpredictability as well, and it is taking its toll on investors. Healthcare, down 1.0 percent, and financials, off 0.6 percent, were the two worst-performing of the 11 major S&P sectors. Cardinal Health was down 11.4 percent, also weighed on healthcare after a disappointing profit forecast overshadowed a deal to buy medical supplies businesses from Medtronic for $6.1 billion.
Safe-havens continued to be in favor, with gold and US Treasury prices climbing ahead of crucial presidential elections in France, rising tensions between the United States and North Korea and the early calling of elections in Britain.
Despite the high profile earnings misses, first quarter results have been promising overall. According to Thomson Reuters data through Tuesday morning, of the 45 companies in the S&P 500 that have reported results, 76 percent have topped expectations.
Across the Atlantic, the FTSE 100 Index lost 2.46 percent, the most since June, while the pound surged against the dollar. Prime Minister May said she was calling the election “with reluctance” but that the UK needs stability during Brexit negotiations. Polls show her Conservative Party is more than 20 points ahead of the main opposition.
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