Rising bond yields help send stocks down
NEW YORK — Rising bond yields and a string of weak company reports and forecasts pushed stocks lower Wednesday as major indexes retreated from their recent record highs. Industrial and technology companies and banks fared the worst.
Companies including telecom giant AT&T, aerospace company Boeing, chipmaker Advanced Micro Devices and credit card issuer Discover Financial Services all gave shaky results, disappointing forecasts, or both. That sent stocks downward, and in early afternoon trading the Dow Jones industrial average fell as much as 190 points, after setting a record the day before.
Bond yields jumped to seven-month highs after a report showed orders for long-lasting manufactured goods and business investment grew in September. That’s good news for the economy, but it actually hurt stocks Wednesday, said Sam Stovall, strategist at CFRA Equity Research, because it might lead to greater inflation.
“Higher yields (and) a string of positive returns from the market combined with some weak earnings numbers gave investors some reasons to attempt to take profits,” he said.
The Commerce Department said orders for longlasting manufactured goods rose 2.2 percent last month, much more than analysts expected. Much of the improvement came from greater sales of commercial aircraft.
Despite the gains in aircraft sales, a solid third-quarter report and a boost in its profit forecast, Boeing stock slumped 2.8 percent to $258.42 Wednesday. It’s almost doubled in value in the last 12 months.
Dr Pepper Snapple tumbled 4.7 percent,. The 7up maker’s profit and sales were weaker than expected. It cut its profit forecast for the year because of higher costs as well as expenses from its purchase of energy drink maker Bai Brands.