Stocks drop on earnings, deals
U.S. stocks dropped Tuesday for the first time in five days as investors assessed company earnings and the latest corporate deal news. More evidence of weakness in China’s economy also unsettled the market.
Ryder System led industrial stocks lower after the transportation and logistics company cut its profit forecast for the third quarter. Molson Coors surged on speculation that a tie-up between the world’s two largest brewers would give it an opportunity to expand its own business.
The stock market started October with strong gains, rebounding from a big slump in the previous two months as investors worried about a slowing Chinese economy. This week investors are focusing on corporate earnings as they try to measure the effect that slowing global growth is having on profits.
Companies that are focused on the U.S. are likely to do well as consumer confidence improves, said Jerry Braakman, chief investment officer of First American Trust.
“It’s been a rally here and the question is: ‘Is this just a bounce?’ ” Braakman said. “The earnings season will help us a little with that. Looking at the consumer numbers here in the U.S., they are still very strong.”
The Standard & Poor’s 500 index fell 13.77 points, or 0.7%, to 2,003.69. The Dow Jones industrial average declined 49.97 points, or 0.3%, to 17,081.89. The Nasdaq composite dropped 42.03 points, or 0.9%, to 4,796.61.
Stocks started the day lower after a report showed that China’s imports fell in September by an unexpectedly wide margin. Imports dropped 20.4% after a 5.5% decline in August. It was the latest sign of weakness in the world’s second-biggest economy.
Among individual stocks, Ryder System was the biggest decliner in the S&P 500 after it cut its earnings forecast. It blamed lower-than-forecast growth at a unit that provides services to companies that own and operate truck fleets. Its stock dropped $7.02, or 9.3%, to $68.63.
Molson Coors was the biggest gainer in the S&P 500. The brewing company surged after AB InBev announced that it had reached an agreement to buy SABMiller. If the deal goes ahead, Molson Coors may get the opportunity to buy full ownership of its MillerCoors joint venture. Molson Coors’ stock jumped $7.83, or 9.9%, to $86.58.
The price of oil slipped. Benchmark U.S. crude fell 44 cents to close at $46.66 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, fell 62 cents to $49.24 a barrel in London.