Wall St stalls as Walgreens shares slip on profit warning

Reuters NEW YORK | Updated on April 03, 2019 Published on April 03, 2019

The S&P 500 consumer staples index, which includes Walgreens, dropped 0.8 per cent. Shares of rival drugstore company CVS Health Corp fell 3.8 per cent. Shares of drug wholesalers AmerisourceBergen Corp, Cardinal Health Inc and McKesson Corp also slid. File Photo   -  Reuters

The benchmark S&P 500 stock index paused on Tuesday, taking a breather from Monday's strong quarterly kick-off as a decline in shares of Walgreens Boots Alliance Inc weighed and economic data did little to ease growth concerns.

Walgreens shares slumped 12.8 per cent after the drugstore chain cut its 2019 profit growth forecast and reported a quarterly profit that missed analyst estimates.

The S&P 500 consumer staples index, which includes Walgreens, dropped 0.8 per cent. Shares of rival drugstore company CVS Health Corp fell 3.8 per cent. Shares of drug wholesalers AmerisourceBergen Corp, Cardinal Health Inc and McKesson Corp also slid.

Walgreens shares weighed the most on all three of Wall Street's major indexes. CVS and the drug wholesalers were also among the biggest drags on the S&P 500.

The Nasdaq moved higher, however, as shares of Facebook Inc jumped 3.3 per cent.

Data showing that new orders for key US-made capital goods slipped in February and that shipments were flat did little to lift tepid investor sentiment.

Orders for non-defence capital goods excluding aircraft, or core capital goods orders, a closely watched proxy for business spending plans, fell 0.1 per cent. Economists polled by Reuters had forecast it to remain unchanged.

The data comes on the heels of a survey showing a surprise rebound in China's manufacturing activity and better-than-expected US numbers, which drove the S&P 500 to near six-month highs on Monday.

“We're still seeing mixed signals in terms of economic data,” said Emily Roland, head of capital markets research at John Hancock Investments in Boston.

The Dow Jones Industrial Average fell 79.29 points, or 0.30 per cent, to 26,179.13, the S&P 500 gained 0.05 points to 2,867.24, and the Nasdaq Composite added 19.78 points, or 0.25 per cent, to 7,848.69.

Despite coming under pressure, the S&P 500 is only 2.2 per cent below a record closing high hit in late September as the Federal Reserve has paused interest-rate hikes and investors have grown optimistic about a resolution to the US-China trade war.

Yet with the first-quarter corporate earnings reporting season about two weeks away, investors are bracing for what may be the first US profit decline since 2016. Analysts expect quarterly earnings to fall 2 per cent, according to Refinitiv data.

“There are reassuring signs that the global economy isn't tumbling into a recession,” said Kate Warne, investment strategist at Edward Jones in St. Louis. “But it's not sufficient to have economic growth. We also need earnings growth.”

Airline stocks got a lift from Delta Air Lines Inc's better-than-expected first-quarter profit forecast. Its shares jumped 6.0 per cent, while the Dow Jones US Airlines index advanced 2.8 per cent.

Dow Inc shares rose 5.1 per cent in the company's stock market debut following its spin-off from DowDuPont Inc.

Declining issues outnumbered advancing ones on the NYSE by a 1.13-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favoured advancers.

The S&P 500 posted 45 new 52-week highs and five new lows; the Nasdaq Composite recorded 54 new highs and 41 new lows.

Volume on US exchanges was 6.45 billion shares, compared to the 7.46 billion average over the last 20 trading days.

Published on April 03, 2019

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