Stocks fall on earn­ings losses, Trump’s N. Korea nuke threat

Austin American-Statesman - - BUSINESS - By Alex Veiga

Losses in health care and con­sumer-fo­cused com­pa­nies pulled U.S. stocks broadly lower Tues­day, snap­ping a 10-day win­ning streak for the Dow Jones in­dus­trial av­er­age.

En­ergy stocks also fell along with the price of crude oil. Only util­i­ties sec­tor stocks eked out a gain on a day of mostly list­less trad­ing as in­vestors kept an eye on the lat­est com­pany earn­ings and geopo­lit­i­cal news.

The mar­ket slide ac­cel­er­ated slightly in the last halfhour of trad­ing as Pres­i­dent Don­ald Trump de­nounced North Korea’s nu­clear pro­gram.

The re­marks fol­lowed a new re­port as­sert­ing that U.S. in­tel­li­gence has as­sessed that Py­ongyang has suc­cess­fully pro­duced a nu­clear war­head that can fit in­side its mis­siles.

“That may have weighed a lit­tle bit” on mar­kets, said Phil Guarco, global in­vest­ment spe­cial­ist J.P. Mor­gan Pri­vate Bank.

The Stan­dard & Poor’s 500 in­dex fell 5.99 points, or 0.2 per­cent, to 2,474.92. The Dow slid 33.08 points, or 0.2 per­cent, to 22,085.34. The S&P 500 and Dow were both com­ing off record highs.

The Nas­daq com­pos­ite lost 13.31 points, or 0.2 per­cent, to 6,370.46. The Rus­sell 2000 in­dex of smaller-com­pany stocks gave up 4.02 points, or 0.3 per­cent, to 1,410.15.

Bond prices were lit­tle changed. The yield on the 10-year Trea­sury note held steady at 2.26 per­cent.

The mar­ket in­dexes wa­vered be­tween small gains and losses for much of the morn­ing, then veered lower by af­ter­noon. The slide deep­ened af­ter Trump’s re­marks.

At a brief­ing on opi­oid ad­dic­tion at his golf course in Bed­min­ster, N.J., Trump warned North Korea not to make any more threats against the United States, ad­ding that North Korea would be “met with fire and fury like the world has never seen.”

The VIX, a mea­sure of how much volatil­ity in­vestors ex­pect in stocks, jumped 10.4 per­cent.

Be­yond geopo­lit­i­cal concerns, in­vestors con­tin­ued to size up com­pany earn­ings re­ports.

Avis Bud­get Group slumped 9.9 per­cent af­ter the car rental com­pany cut its guid­ance fol­low­ing a weak sec­ond quar­ter. The stock fell $3.30 to $30.09.

Traders snapped up shares in com­pa­nies that de­liv­ered strong quar­terly re­sults.

Michael Kors climbed 21.5 per­cent af­ter the lux­ury hand­bag and ap­parel de­signer and re­tailer’s lat­est quar­terly re­sults beat an­a­lysts’ fore­casts as sales im­proved. The stock was the big­gest gainer in the S&P 500, ad­ding $8.02 to $45.25.

Bench­mark U.S. crude fell 22 cents to $49.17 a bar­rel on the New York Mer­can­tile Ex­change. Brent crude lost 23 cents to $52.14 a bar­rel in Lon­don.

Fol­low­ing wide­spread ou­trage over a pas­sen­ger who was vi­o­lently dragged off an over­booked plane, U.S. air­lines are bump­ing cus­tomers at the low­est rate in at least two decades.

The Trans­porta­tion De­part­ment said Tues­day that just one in ev­ery 19,000 pas­sen­gers was kicked off an over­booked flight in the first six months of this year.

That’s the low­est rate since the gov­ern­ment started keep­ing track in 1995.

The big­gest de­cline took place be­tween April and June, partly be­cause air­lines be­gan pay­ing many more pas­sen­gers to give up their seats.

Air­lines have rou­tinely over­booked flights for years in the ex­pec­ta­tion that some pas­sen­gers won’t show up. When a flight is over­booked, air­lines typ­i­cally of­fer travel vouch­ers to en­cour­age a few pas­sen­gers to take a later flight.

That prac­tice back­fired in April when United em­ploy­ees, whose of­fers of vouch­ers were ig­nored, asked Chicago air­port of­fi­cers to help re­move four peo­ple from a United Ex­press flight to make room for air­line em­ploy­ees com­mut­ing to their next flight.

A 69-year-old man was dragged forcibly down the air­plane aisle and other pas­sen­gers cap­tured the spec­ta­cle on cam­era phones, turn­ing the in­ci­dent into a pub­lic-re­la­tions dis­as­ter for United.

Since then, United and other large U.S. air­lines have in­tro­duced new mea­sures to re­duce over­book­ing, and raised the max­i­mum amount that pas­sen­gers can be of­fered to give up a seat.

Pas­sen­gers still get bumped, how­ever. Be­sides in­stances in which air­lines sell too many seats, pas­sen­gers may get booted when a me­chan­i­cal break­down causes an air­line to use a smaller air­craft, or when the plane’s weight must be re­duced for safe take­off.

United Air­lines spokes­woman Me­gan Mc­Carthy said the car­rier has sharply re­duced bump­ing since the April in­ci­dent. United booted 1,964 pas­sen­gers in the first six months of 2017, with more in the sec­ond quar­ter than the first.

How­ever, Mc­Carthy said, bump­ings dropped from 957 in April to 61 in May and 46 in June.

Trav­el­ers were least likely to be bumped on JetBlue Air­ways, Hawai­ian Air­lines and Delta Air Lines. Spirit Air­lines had the high­est rate of boot­ing pas­sen­gers, although South­west Air­lines, a much big­ger car­rier, bumped the most peo­ple, 2,642 in six months. United’s rate ex­actly matched the in­dus­try av­er­age. United, JetBlue, Delta and South­west all con­vinced more pas­sen­gers to give up their seats than they had in the same pe­riod a year ago.

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