Wall Street dips on earnings; dollar index hits 7-month high

Oil prices edge up ahead of US data; gold rises

NEW YORK, Oct 25, (Agencies): US stocks slipped on disappointing earnings reports on Tuesday, while U.K shares rose helped by mining firms, and crude oil prices fell as the US dollar hit a seven month high.

Nine of the eleven sectors in the benchmark US S&P 500 stock index were negative, after poor earnings forecasts from some of the largest companies.

General Motors Co shares fell more than 4.7 percent, despite better-thanexpected third-quarter earnings, amid fears a slowdown in US vehicle sales and a rising US dollar will undercut international profits.

Caterpillar Inc also reported a sharply lower quarterly profit on slow sales, driving its stock price down 1.4 percent.

Manufacturer 3M fell 3.0 percent to $165.87 after the maker of Scotch tape and Post-it notes trimmed its full-year revenue and earnings forecasts for the second time.

“We’ve had some mixed earnings today and the market right now is digesting earnings and positioning itself ahead of the Fed meeting next week,” said Jeff Zipper, managing director for investments at Private Client Reserve at US Bank in Palm Beach, Florida..

Another third of the S&P 500 index stocks are scheduled to report earnings later this week, including heavyweights Apple , Alphabet, Amazon and Boeing.

The Dow Jones industrial average fell 40.27 points, or 0.22 percent, to 18,182.76, the S&P 500 lost 5.72 points, or 0.27 percent, to 2,145.61 and the Nasdaq Composite dropped 20.81 points, or 0.39 percent, to 5,289.02..

It was a different picture in Europe, where mining companies rose 2.9 percent, lifted in part by Anglo American . The mining company rose 4.0 percent after its production update. Anglo is the top performing stock on Europe’s STOXX 600 this year.

The UK’s FTSE 100 Index extended gains, rising 0.34 percent as sterling dipped slightly.

Germany’s Dax turned slightly lower after hitting its highest level of the year. The closely-watched Ifo survey had beat expectations a day after purchasing manager numbers had done the same. Metal prices also surged, with zinc up 1.88 percent at $2,355, from an earlier three-week high of $2,376. It is up nearly 60 percent from January lows on worries about shortages.

In Asia, Japan’s Nikkei rose 0.7 percent to close at a six-month high as a softening yen burnished the outlook for the country’s exporters. Australian stocks added 0.6 percent and Taiwan 0.7 percent.

Other commodity prices slipped though as many are priced in US dollars and the greenback rose to a seven month high on an index of major currencies.

The US dollar is benefiting from expectations of a Federal Reserve interest rate rise before year end. Traders saw a more than 78 percent chance the Fed will raise rates in December, up from a 74 percent chance Monday, according to data from CME Group’s FedWatch program.

China’s yuan hit its lowest against the dollar since offshore trading was introduced in 2010 of 6.7882 yuan per dollar. The People’s Bank of China set the midpoint rate at 6.7744 per dollar prior to market open, weaker than the previous fix 6.7690.

Oil prices were lower with US crude breaking below $50 per barrel ahead of weekly data that could show a rise in domestic inventories.

Brent was 56 cents, or about 1 percent, lower at $50.90 per barrel at 11:30 a.m. ET (1530 GMT), while US crude dropped by 42 cents to $50.10.

US

Disappointing corporate results from several heavyweights dragged down Wall Street as investors looked for clues regarding the timing of the next interest rate hike ahead of a Fed meeting next week.

3M fell 3 percent to $165.03 after the maker of Scotch tape and Post-it notes trimmed its full-year revenue and earnings forecasts for the second time. The stock was the biggest drag on the Dow.

Whirlpool fell 10.5 percent to $152.60 after the home appliances maker’s revenue took a hit from a strong dollar.

Annualized third-quarter earnings from S&P 500 companies are expected to have risen 1.7 percent, following four quarters of contraction, according to Thomson Reuters I/B/E/S.

Of the 150 companies that have reported so far, 75.3 percent have beaten analyst expectations, above the longterm average of 63.5 percent.

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 percent chance for a December hike, according to CME Group’s FedWatch tool.

At 12:44 p.m. ET (1644 GMT), the Dow Jones industrial average was down 48.21 points, or 0.26 percent, at 18,174.82, the S&P 500 was down 7.94 points, or 0.37 percent, at 2,143.39 and the Nasdaq Composite was down 28.71 points, or 0.54 percent, at 5,281.12.

Nine of the 11 major S&P sectors were lower, with the materials index falling 0.98 percent. Sherwin-Williams fell 10 percent and weighed the most on the index.

The consumer discretionary sector also fell 1.09 percent as poor results from Sherwin-Williams weighed on Home Depot. Home Depot weighed the most on the S&P.

Caterpillar slipped 1.6 percent after giving a downbeat forecast, while General Motors fell 4.2 percent amid fears regarding future profits.

Procter & Gamble rose 3.8 percent to $87.32 after reporting a better-thanexpected quarterly profit.

Apple, which is scheduled to report results after the close of the bell, slipped 0.15 percent to $117.47.

Under Armour fell 13.9 percent to $32.58 after the sportswear maker reported its slowest quarterly sales growth in six years.

Declining issues outnumbered advancing ones on the NYSE by 1,828 to 1,039. On the Nasdaq, 1,894 issues fell and 789 advanced.

The S&P 500 index showed 10 new 52-week highs and eight new lows, while the Nasdaq recorded 50 new highs and 55 new lows.

Europe

European shares turned lower after a strongly start on Tuesday, with Germany’s DAX briefly touching a new peak for 2016, after sentiment was knocked by mixed earnings on Wall Street and in Europe. The pan-European STOXX 600 index ended down 0.4 percent. Germany’s DAX ended flat after earlier touching a new peak for 2016 of 10,827.72 points.

The German stock market outperformed after Ifo data showed that German business morale had improved unexpectedly in October, suggesting company executives have become more optimistic about the growth prospects for Europe’s largest economy.

But other parts of the market were more volatile. Italy’s Banca Monte Paschi dei Siena ended 15 percent lower, having at one stage been 25 percent higher, after it announced a new strategic plan. In a major gamble by a new CEO appointed last month to save the world’s oldest bank, the lender said it would launch a debt-to-equity conversion and a capital increase, as well as lay off a 10th of its staff, shut branches and sell assets to win investor backing.

Top faller on the STOXX 600 was semi-conductors group AMS slumped by nearly 13 percent after it gave a weak Q4 outlook, while some analysts were cautious over AMS’ mid-term targets.

Dassault Systemes and Finnish refiner Neste

also fell after results, down 7 percent and 5.6 percent respectively.

European shares turned lower after a positive start, dropping along with US stocks, which were also hindered by weaker earnings.

In Europe 40 percent of companies have missed quarterly earnings expectations this season, Thomson Reuters Starmine data shows, compared to just 22 percent on the US S&P 500

Asia

The dollar rose in Asia Tuesday as the chances of an interest rate hike were further boosted, while most stock markets recovered from early losses to track a Wall Street lead higher.

In afternoon Asian trade, the dollar bought 104.45 yen, up from 104.21 yen in New York, while the pound also retreated against the US unit and the euro was virtually unchanged.

Most other Asia-Pacific currencies also weakened, with the South Korean won down 0.3 percent and Australian dollar 0.1 percent off.

Shares in Kyushu Railway surged 15 percent as the former state-owned firm made its Tokyo trading debut after this year’s third biggest initial public offering, worth $4.0 billion.

Among other markets Sydney rose 0.6 percent, Shanghai added 0.1 percent and Singapore was slightly higher in late trade. There were also positive finishes in Wellington and Taipei.

But Hong Kong closed 0.2 percent lower and Seoul shed 0.5 percent.

Tokyo — Nikkei 225: UP 0.8 percent at 17,365.25 (close)

Hong Kong — Hang Seng: DOWN 0.2 percent at 23,565.11 (close)

Shanghai — Composite: UP 0.1 percent at 3,131.94 (close)

Oil

Oil edged up on Tuesday ahead of the release of US crude inventory data, which in recent weeks has provided bullish surprises, but comments by OPEC members regarding chances of an output cut kept a lid on prices.

Brent crude oil futures was up 21 cents at $51.67 per barrel by 1100 GMT. US West Texas Intermediate (WTI) crude futures turned positive, gaining 30 cents to $50.82.

The American Petroleum Institute is due to publish weekly crude stocks estimates at 2030 GMT, followed by the official Energy Information Administration data due on Wednesday.

US crude inventories were seen to have risen last week by 800,000 barrels to 469.5 million barrels, compared with a 5 million barrel fall in the previous week.

Analysts said a leak in a pipeline leading out of the huge Cushing, Oklahoma, storage hub should lead to more build up of stocks in the coming weeks.

Gold

Gold rose on Tuesday due to rising physical demand from India but growing expectations of a US interest rate hike kept a lid on prices.

The metal is highly sensitive to rising US rates, which lift the opportunity cost of holding non-yielding assets while boosting the dollar.

Spot gold was up 0.4 percent at $1,268.68 an ounce at 1220 GMT. It has traded in a narrow $6.60 per ounce range for the past five sessions.

Analysts say demand from India is expected to remain elevated as festivals, including Dhanteras and Diwali, will be celebrated at the end of the month — two of the most important Hindu festivals and a time when gold is traditionally given as a gift.