Stocks fall as interest rates rise, earnings disappoint
0.2%
Jump in spot gold to $1,224.38 per ounce
new york — US stocks fell on Thursday as interest rates resume their upward climb and several industrial companies post disappointing third-quarter results.
Interest rates started rising a day ago after the Federal Reserve released minutes showing that a minority of its leaders think interest rates will need to keep rising to a level that slightly restricts economic growth.
The S&P 500 index shed 17 points, or 0.6 per cent, to 2,791 as of 10am Eastern time. The Dow Jones Industrial Average lost 178 points, or 0.7 per cent, to 25,528. The Nasdaq composite sank 59 points, or 0.8 per cent, to 7,583. The Russell 2000 index of smallercompany stocks declined 9 points, or 0.6 per cent, to 1,579.
Germany’s DAX dipped 0.3 per cent and the FTSE 100 in Britain also fell 0.1 per cent. The CAC 40 in France added 0.1 per cent.
Japan’s Nikkei 225 index sank 0.8 per cent and the Kospi in South Korea lost 0.9 per cent. Hong Kong’s Hang Seng index was little changed.
The dollar inched up to 112.52 yen from 112.49 yen. The euro fell to $1.1490 from $1.1507.
US bond prices dropped. The yield on the 10-year Treasury note rose to 3.19 per cent from 3.15 per cent. The yield on the 10-year note spiked to seven-year highs last week.
Aircraft maker Textron slid 8.1 per cent to $59.55 after its profit and sales fell far short of analyst forecasts. The company said its aerospace and defense business and its industrial business both weakened. Tool and diagnostic equipment company Snap-On lost 7.7 per cent to $154.64 after it posted lower revenue than analysts expected, and United Rentals fell 6.5 per cent to $130.07 after its report.
Elsewhere, Caterpillar fell 2.6 per cent to $137.69. Industrial and basic materials companies have taken bigger losses than any other part of the market over the last month, and one reason is that investors feel they are especially vulnerable in the ongoing trade dispute between the US and China. Higher tariffs on metals can hurt the sales of companies like Alcoa and also drive up costs for companies that use those metals to make other kinds of machinery.
Aluminium producer Alcoa rose 8.2 per cent to $39.72 after it topped Wall Street projections in the third quarter. The company also said it will buy back $200 million in stock. Alcoa’s stock has slumped over the last six months as the US announced tariffs on imported steel and aluminium, which is reducing the company’s profits because it has several facilities in Canada.
Meanwhile Gold edged higher, supported by an improved technical outlook after scaling key milestones as the market continued to hold out against a stronger dollar.
Spot gold was up 0.2 per cent at $1,224.38 an ounce by 1138 GMT. US gold futures were flat at $1,227.40.