Disappointing corporate results from several heavyweights dragged down Wall Street today as investors looked for any clues regarding when the next interest rate hike might occur ahead of next week's Fed meeting.
By Paolo Palazzi-Xirinachs
Tuesday, October 25, 2016
In mid-afternoon trading, the Dow Jones industrial was down 0.18%, and the S&P 500 index was down 0.28%. The Nasdaq index also dropped 0.46%.
US markets slumped today because several companies issued disappointing results and forecasts. Shares of the athletic apparel maker Under Armour fell as it reported its slowest sales growth in six years and said its future sales would not be as strong as it expected a year ago. Its stock tumbled 13.1%. Under Armour traded above $50 a share a little more than a year ago. The paint and coatings maker Sherwin-Williams posted a profit that was smaller than expected. The company cut its annual guidance because of slower sales growth combined with spending on new stores. Its stock lost 10.3%. Appliance maker Whirlpool’s results fell far short of analysts’ projections. Shares of Whirlpool, the maker of Maytag and KitchenAid products, gave up 12.2%. Meanwhile Procter & Gamble, reported better results than investors expected. The consumer products giant has been selling some businesses to cut costs, and it posted stronger sales of personal care products like toothbrushes and deodorants. Its stock rose 4%. Procter & Gamble is a Dow component and pulled that index higher briefly this morning.
Annualized third-quarter earnings from S&P 500 companies are expected to have risen 1.7%, following four quarters of contraction. Of the 150 companies that have reported so far, 75.3% have beaten analyst expectations, above the long-term average of 63.5% Despite this, the indexe fell today - in likelihood because of some uncertainty around the election and the Fed, and Brexit too.
While investors aren't expecting the Fed to raise rates when it meets next week, they will be looking for clues regarding the trajectory of future hikes. Traders are pricing in a 74% chance for a December hike, according to CME Group's FedWatch tool. Also, today we learned that American consumers felt less confident this month, according to the Conference Board. Consumer confidence was lower than expected. The measurement rose to a 20-month high in September.
In European Markets, Germany's DAX edged down slightly, and in France, the CAC 40 lost 0.3%. The FTSE 100 was up 0.4% in Britain. In Asia, the Nikkei 225 rose 0.8% in Japan, while in Hong Kong, the Hang Seng dipped 0.2%. The Shanghai composite index added 0.1% in China.
In other economic news, Benchmark United States crude oil lost 62 cents, to $49.90 a barrel in New York. Brent crude, the international standard, dropped 63 cents, to $50.83 a barrel in London. Meanwhile US Bond prices rose. The yield on the 10-year Treasury note fell to 1.76% from 1.77%..The dollar fell to 104.26 yen from 104.30 yen. The euro strengthened to $1.0885 from $1.0875.
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