The Herald Bulletin

Afternoon Update

Nation & World

October 23, 2013

Stock drop on mixed earnings; Caterpillar sinks

NEW YORK — Mixed earnings reports pushed the Standard& Poor's 500 index from a record on Wednesday.

Caterpillar slumped after the maker of mining and construction equipment said its third-quarter earnings plunged. The company cut its earnings forecast again. The stock dropped $4.67, or 5.2 percent, to $84.49.

Boeing jumped after raising its profit estimate for the full year as deliveries of commercial planes continue to accelerate. The plane maker's stock climbed $5.29, or 4.3 percent, to $127.79.

The S&P 500 index fell back after surging 6 percent over the previous two weeks. The index climbed as lawmakers inched toward a deal to end a 16-day partial government shutdown and avert a potential U.S. default. Investors also became more convinced that the Federal Reserve will refrain from easing back on its economic stimulus until possibly next year.

"We need to let a little bit of air out of the balloon here," said Alec Young, a global equity strategist at S&P Capital IQ. "We've seen a huge rally, so there's a bit of short-term-exhaustion."

The S&P 500 dropped 9 points, or 0.5 percent, to 1,745, as of 12:04 p.m. Eastern Time. The index is on track for its first down day in six.

Energy stocks dropped the most as the price of oil fell to its lowest in almost four months. Oil slipped $1.23, or 1.3 percent, to $97.01 a barrel.

The Dow Jones industrial average fell 57 points, or 0.4 percent, to 15,407. The Nasdaq composite dropped 28 points, or 0.6 percent, to 3,900.

Many analysts and economists expect the Fed to refrain from easing its stimulus until next year to help the economy maintain its momentum after the government shutdown. The central bank is currently buying $85 billion in bonds every month to keep interest rates low. That stimulus program has underpinned a 4 ½ year rally in stocks.

While some earnings disappointed investors on Wednesday, most are doing better than expected. About sixty percent of the companies in the S&P 500 that have reported third-quarter earnings have beaten analysts' forecasts, according to data from S&P Capital IQ.

"Obviously we've had one casualty today with Caterpillar but, so far, most companies have beaten market expectations," said Peter Cardillo, chief market economist at Rockwell Global Capital.

S&P 500 companies are expected to report earnings growth of 3.5 percent for the July-to-September quarter over the same period a year earlier. Revenue is expected to rise by 3.9 percent.

In government bond trading, the yield on the 10-year note fell to 2.48 percent from 2.51 percent late Tuesday. The yield is at its lowest since mid-July.

In commodities, the price of gold fell $7.60, or 0.6 percent, to $1,335.20 an ounce.

Among other stocks making big moves:

— Corning surged $1.82, or 11.7 percent, to $17.17 after the company announced a new tie-up with a Samsung Electronics subsidiary that will boost the glass maker's earnings immediately.

— Safeway rose $2.25, or 6.8 percent, to $35.13 following a report from Reuters late yesterday that "a handful" of buyout firms, including Cerberus Capital Management, are exploring a deal for all, or part, of the supermarket chain.

— Broadcom fell $1.20, or 4.4 percent, to $25.93. The communications chip maker reported adjusted results that exceeded Wall Street expectations, but the company's earnings forecast disappointed investors.

 

1
Text Only
Nation & World
More Resources from The Herald Bulletin
AP Video
Kerry: Humanitarian Cease-fire Efforts Continue Raw: Corruption Trial Begins for Former Va Gov. The Carbon Trap: US Exports Global Warming UN Security Council Calls for Gaza Cease-fire Traditional African Dishes Teach Healthy Eating 13 Struck by Lightning on Calif. Beach Baseball Hall of Famers Inducted Israel, Hamas Trade Fire Despite Truce in Gaza Italy's Nibali Set to Win First Tour De France Raw: Shipwrecked Concordia Completes Last Voyage Raw: Sea Turtle Hatchlings Emerge From Nest Raw: Massive Dust Storm Covers Phoenix 12-hour Cease-fire in Gaza Fighting Begins Raw: Bolivian Dancers Attempt to Break Record Raw: Israel, Palestine Supporters Rally in US Raw: Air Algerie Flight 5017 Wreckage Virginia Governor Tours Tornado Aftermath Judge Faces Heat Over Offer to Help Migrant Kids Kangaroo Goes Missing in Oklahoma More M17 Bodies Return, Sanctions on Russia Grow
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Helium debate
Helium