Industrial sector a drag on stocks
U.S. stock indexes finished mostly lower Thursday as disappointing earnings reports from several industrial sector companies weighed on the market, offsetting strong results from Facebook, Microsoft and others.
The S&P 500 slipped 1.08 point, or less than 0.1%, to 2,926.17. The Dow Jones industrial average lost 134.97 points, or 0.5%, to 26,462.08. Without the loss from 3M, the Dow would have been 58 points higher.
The Nasdaq composite rose 16.67 points, or 0.2%, to 8,118.68.
Small-company stocks fared worse than the rest of the market. The Russell 2000 index gave up 12.52 points, or 0.8%, to 1,575.61.
Major European indexes finished lower.
3M, which makes Post-it notes and many other products, plunged 12.9% in heavy trading after announcing weak results and a restructuring program. It was the biggest loss for the company since the market crash of October 1987.
The loss for 3M pulled the Dow into the red. The S&P 500 finished slightly lower, holding close to the record high it set Tuesday.
Facebook and Microsoft both rose after reporting strong earnings. That helped the Nasdaq eke out a small gain.
The indexes’ mixed finish gave the benchmark S&P 500 index its second modest loss in as many days. The market remains on track for solid gains this month.
Traders have grown more optimistic that most companies will continue to deliver strong growth this year, despite some signs that point to a slowing global economy.
“Earnings are flowing, and we’re going to see a positive earnings season,” said Karyn Cavanaugh, senior markets strategist, Voya Investment Management. “If [the market]
keeps going up, up, up, then that kind of makes you a little skeptical. The fact that investors are being a little bit more selective, that’s a good sign.”
Bond prices fell. The yield on the 10-year Treasury note rose to 2.53% from 2.52% late Wednesday.
Industrial stocks were on the losing side Thursday after 3M reported lower revenue and profit for the first three months of the year than Wall Street expected. It also slashed its profit forecast for the full year.
UPS said its net income fell 17% on nearly flat revenue, and Illinois Tool Works had weaker revenue than analysts forecast. Rockwell Automation said that automotive related sales were less than it expected last quarter.
UPS lost 8.1%, Illinois Tool Works fell 3.6% and Rockwell Automation sank 6.7% after their earnings reports.
Raytheon, a defense contractor that is also in the industrial sector, dropped 4.4%. It reported stronger profit for the latest quarter than expected, but analysts noted some mixed results for its profit margins.
Facebook surged 5.8% after the social media giant reported a 26% jump in quarterly revenue. That helped lift the communications sector by 1.1%.
Microsoft gained 3.3% after the software maker said its quarterly revenue vaulted 14% from a year earlier. Amazon reported that its profit more than doubled in the first quarter, the latest sign that the e-commerce company’s push into advertising and cloud computing paid off. Amazon reported its results after the close of regular trading.
Entering this earnings reporting season, Wall Street was expecting a dud. Partially because of slowing economic growth around the world, analysts were forecasting the first drop in earnings for the S&P 500 in nearly three years.