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