Stock Doldrums Continue on Industrial Companies’ Earnings
US stocks dipped in a choppy session after the latest round of earnings reports, as a decline in the consumer discretionary sector and interest-rates sensitive stocks outweighed gains in healthcare.
Thursday, October 27, 2016 - 00:00
In mid-afternoon trading, the Dow Jones industrial average was up 0.07%, and the Standard & Poor’s 500-stock index was down 0.01%. The Nasdaq composite index lost 0.35%.
Profits at S&P 500 companies have largely exceeded analysts' estimates for the third quarter so far, setting up the first profit growth since the second quarter of 2015. Thomson Reuters I/B/E/S data shows third-quarter earnings are now expected grow 2.6%, up from the 0.5% decline anticipated at the start of October.
Amazon.com Inc reported a lower-than-expected quarterly, as expenses rose and the company provided a disappointing fourth-quarter revenue forecast. Amazon, whose shares were down 6.8% in after-hours trading, said its net income rose to $252 million, or 52 cents per share, from $79 million, or 17 cents per share, a year earlier. It was the company's sixth straight profitable quarter. But earnings per share were far short of the average estimate of 78 cents
The smartphone chip maker Qualcomm said it would buy NXP Semiconductors for $110 a share in cash, or $38 billion. Qualcomm stock rose 4.7%, and shares of NXP gained 0.7%. The deal had been rumored for about a month and investors were excited about the prospect: Qualcomm stock has risen 13% in that time, and NXP shares are up 22%.
Shares of the military contractor Raytheon gave up 3.3% as the company’s outlook failed to impress investors. Shares of the aerospace giant Boeing lost 1.7%, after the stock surged almost 5% on Wednesday, its biggest gain since January 2015.
New orders for US manufactured capital goods unexpectedly fell in September amid weak demand for computers and electronic products, which could temper expectations for an acceleration in business spending in the fourth quarter. Despite the prolonged energy-driven weakness in manufacturing, the rest of the economy is in better shape.
Other reports on Thursday showed a drop in the number of Americans applying for unemployment benefits last week and a jump in contracts to purchase previously owned homes in September.
in other financial news, oil prices stabilized after falling for three consecutive days. United States benchmark crude oil futures rose 69 cents, to $49.87 a barrel on the New York Mercantile Exchange. Brent crude, the international standard, added 69 cents, to $50.67 a barrel in London. The dollar rose to 105.27 yen from 104.66 yen in late trading Thursday. The euro was lower, at $1.0895 from $1.0906.
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