Stocks

Weak industrial earnings drag Wall Street lower

Reuters New York | Updated on April 26, 2019 Published on April 26, 2019

Declining issues outnumbered advancers for a 2.38-to-1 ratio on the NYSE and a 2.14-to-1 ratio on the Nasdaq. File photo   -  Reuters

Facebook Inc jumped 5.6 per cent after the social media giant's quarterly profit blew past analysts' profit estimates

The United States (US) stocks were pulled lower on Thursday by downbeat earnings from industrial companies, including 3M, although strong results from marquee names Facebook and Microsoft kept the tech-heavy Nasdaq afloat.

3M Co shares tumbled 11.3 per cent after the Post-It notes maker reported a lower-than-expected quarterly profit, cut its 2019 earnings forecast and said it would lay off 2,000 workers globally.

Industrials dropped two per cent, also dragged down by a 7.9 per cent fall in United Parcel Service Inc's shares following the company's disappointing earnings.

On the other hand, Facebook Inc jumped 5.6 per cent after the social media giant's quarterly profit blew past analysts' profit estimates.

Microsoft Corp rose 3.7 per cent, briefly crossing $1 trillion in market value, after the software giant beat estimates for quarterly results and predicted continued growth for its cloud computing business.

“The information from 3M is an insight into industrial production, manufacturing and so on and that becomes a proxy for global growth than Facebook or even Microsoft, and that is stirring the markets a little bit,” said Josh Wein, portfolio manager for Hennessy Funds in Chapel Hill, North Carolina.

“People are looking for a crack, they see 3M as a crack, so the markets may sell off temporarily, but ultimately the sentiment remains positive.”

Of the 178 S&P 500 companies that have reported so far, about 78 per cent have topped profit estimates, according to Refinitiv data. The forecast for earnings have hugely improved from a 2.3 per cent decline at the start of the season to a flat reading as of Thursday.

The S&P 500 has rallied this year, rebounding from a late-2018 slump, on hopes of a U.S.-China trade deal and a dovish tilt from the Federal Reserve. The index is 0.6 per cent below its record high hit in late September.

At 11:18 am, ET - the Dow Jones Industrial Average, was down 207.39 points, or 0.78 per cent, at 26,389.66, the S&P 500 was down 5.28 points, or 0.18 per cent, at 2,921.97 and the Nasdaq Composite was down 0.74 points, or 0.01 per cent, at 8,101.28.

Among the four S&P sectors trading higher was communication services index, boosted by Facebook.

The top decliner on the S&P 500 was Xilinx Inc, which tumbled 16.3 per cent after the chipmaker's quarterly gross margins fell short of estimates. The Philadelphia chip index dropped 2.3 per cent.

Lam Research jumped 4.6 per cent as the semiconductor equipment maker reported better-than-expected quarterly results.

Declining issues outnumbered advancers for a 2.38-to-1 ratio on the NYSE and a 2.14-to-1 ratio on the Nasdaq.

The S&P index recorded 15 new 52-week highs and four new lows, while the Nasdaq recorded 37 new highs and 37 new lows.

Published on April 26, 2019
This article is closed for comments.
Please Email the Editor