Earnings, oil prices weigh on stocks
Tepid corporate results and another drop in the price of crude oil pulled stocks mostly lower.
DuPont said the rising dollar weighed on its results in the first quarter as earnings and sales shrank. The chemical giant also lowered its forecast for full-year profit, and its stock fell $2.15, or 3%, to $70.69.
“It seems the market is in a holding pattern as investors are waiting to see just how much the dollar impacts corporate earnings,” said Russell Price, Ameriprise Financial’s senior economist. “So far, things are a bit better than expected.”
The Standard & Poor’s 500 index fell 3.11 points, or 0.2%, to close at 2,097.29. The Dow Jones industrial average fell 85.34 points, or 0.5%, to 17,949.59 while the Nasdaq composite gained 19.50 points, or 0.4%, to 5,014.10.
A strong dollar reflects the relative strength of the U.S. economy, but for big companies with customers around the world, a rising dollar can mean trouble. It makes goods produced in the U.S. more expensive to foreign customers and diminishes the value of sales collected in foreign currencies when U.S. corporations bring the money home.
The rising dollar is a key reason analysts forecast that first-quarter earnings will fall 2.2%, according to S&P Capital IQ. They expect sales to sink 1.8%.
Among a slew of other companies reporting results Tuesday, Harley-Davidson turned in quarterly sales that fell short of analysts’ targets. The maker of motorcycles also cut its full-year forecast for shipments, blaming price cuts by rivals as well as the strong dollar. The company’s stock fell $6.05, or 10%, to $55.72.
Teva Pharmaceuticals proposed buying Mylan, another maker of generic drugs, for more than $40 billion in cash and stock. The offer depends on Mylan dropping its proposed acquisition of drug maker Perrigo. Mylan’s stock jumped $6.02, or 9%, to $74.07. Teva’s rose 87 cents, or 1%, to $64.16.
Crude oil fell $1.12 to close at $55.26 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, lost $1.37 to close at $62.08 a barrel in London.