Global stocks sag fol­low­ing dis­ap­point­ing profit re­ports


Kuwait Times - - BUSINESS -

NEW YORK: Stock mar­kets around the world sagged on Fri­day af­ter Ama­zon and other big com­pa­nies re­ported quar­terly re­sults that un­der­whelmed in­vestors. The Stan­dard & Poor’s 500 in­dex lost 3.32 points, or 0.1 per­cent, to 2,472.10 and closed a week packed with cor­po­rate earn­ings re­ports al­most ex­actly where it started. It set a record dur­ing the mid­dle of it.

The Dow Jones in­dus­trial av­er­age gained 33.76 points, or 0.2 per­cent, to 21,830.31 and set an­other all-time high. The Nas­daq com­pos­ite fell 7.51, or 0.1 per­cent, to 6,374.68. A lit­tle more than half the com­pa­nies in the S&P 500 have now shown how much profit they made dur­ing the spring, and the re­sults have been mostly en­cour­ag­ing. Earn­ings for the in­dex are on pace to be about 9 per­cent higher than a year ear­lier, ac­cord­ing to Fac­tSet. But ex­pec­ta­tions were high com­ing into the re­port­ing sea­son, and the few com­pa­nies that have fallen short of fore­casts have seen their stock prices pun­ished.

Ama­zon dropped $25.96, or 2.5 per­cent, to $1,020.04 af­ter its profit missed ex­pec­ta­tions. Its fore­cast for op­er­at­ing in­come this fis­cal year was also be­low many an­a­lysts’ fore­casts, though rev­enue for the lat­est quar­ter beat ex­pec­ta­tions. Earn­ings re­ports were the main fo­cus for mar­kets dur­ing a busy week, where the Fed­eral Re­serve also de­cided on Wed­nes­day to hold in­ter­est rates steady and the govern­ment on Fri­day gave an up­date on the econ­omy’s health. The econ­omy grew at an an­nual rate of 2.6 per­cent in the sec­ond quar­ter, revved up by a rise in con­sumer spend­ing, the Com­merce De­part­ment re­ported. Last quar­ter’s growth rate was more than dou­ble that of the year’s first quar­ter, which was re­vised down to 1.2 per­cent. The faster growth, though, was still a shade be­low the 2.7 per­cent that econ­o­mists ex­pected.

“Over­all, the econ­omy con­tin­ues to move along, but it’s hard to see where the fuel is go­ing to come from for fur­ther ac­cel­er­a­tion,” said Rich Weiss, chief in­vest­ment of­fi­cer of multi-as­set strate­gies at Amer­i­can Cen­tury In­vest­ments. He says the econ­omy re­minds him of what golfers call a “son-in-law” shot, one that’s not bad but not great.

No new money

“We’re not throw­ing new money into the stock mar­ket at this point,” Weiss said. In­stead of US stocks, he prefers for­eign mar­kets where he says economies have more po­ten­tial for im­prove­ment. Many other in­vestors have shifted their money us­ing a sim­i­lar phi­los­o­phy, and the fall­ing value of the dol­lar against other cur­ren­cies has helped boost for­eign stocks’ re­turns. Ex­cite­ment about the US econ­omy had been higher ear­lier in the year, when many in­vestors ex­pected the Repub­li­can takeover of Wash­ing­ton to lead to more probusi­ness poli­cies. But in­ac­tion in the Capi­tol, capped by the Se­nate’s lat­est failed at­tempt to re­vamp the na­tion’s health care sys­tem, is rais­ing doubts about whether tax re­form or a big in­fra­struc­ture plan will hap­pen.

Tobacco stocks were some of Fri­day’s worst per­form­ers af­ter the US govern­ment said it’s con­sid­er­ing lim­it­ing the amount of nico­tine in cig­a­rettes so that they’re no longer ad­dic­tive. Al­tria Group, which sells Marl­boro and other cig­a­rettes in the US, fell $7.02, or 9.5 per­cent to $66.94. It had been down as much as 18.9 per­cent shortly af­ter the Food and Drug Ad­min­is­tra­tion’s an­nounce­ment.

Flowserve, which sells pumps, valves and other parts for the oil and gas in­dus­tries, dropped to the big­gest losses in the S&P 500 af­ter re­port­ing weaker earn­ings for the lat­est quar­ter than Wall Street had fore­cast. It sank $5.06, or 10.9 per­cent, to $41.30.

Star­bucks fell $5.50, or 9.2 per­cent, to $54.00 af­ter it low­ered its fore­cast for earn­ings this fis­cal year, and Goodyear Tire & Rub­ber sank $2.97, or 8.4 per­cent, to $32.51 af­ter it gave a fore­cast for 2017 op­er­at­ing in­come that fell short of an­a­lysts’ ex­pec­ta­tions. The yield on the 10-year Trea­sury note fell to 2.28 per­cent from 2.32 per­cent late Thurs­day. The two-year yield dipped to 1.34 per­cent from 1.36 per­cent, and the 30-year yield dropped to 2.90 per­cent from 2.93 per­cent.

Stock mar­kets around the world were weak. Ja­pan’s Nikkei 225 in­dex dropped 0.6 per­cent, South Korea’s Kospi lost 1.7 per­cent and the Hang Seng in Hong Kong fell 0.6 per­cent. France’s CAC 40 lost 1.1 per­cent, the FTSE 100 in Lon­don fell 1 per­cent and Ger­many’s DAX dropped 0.4 per­cent. The dol­lar fell to 110.60 Ja­panese yen from 111.09 yen late Thurs­day. The euro rose to $1.1760 from $1.1681, and the Bri­tish pound rose to $1.3149 from $1.3070. —AP

HONG KONG: An elec­tronic stock board shows the Hang Seng In­dex at a bank in Hong Kong on Fri­day. —AP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.