Weak corporate earnings send US stocks lower
NEW YORK (AP) — Disappointing corporate earnings pushed the stock market lower on Tuesday.
Tenet Healthcare plunged after the hospital operator said that its third-quarter profit fell, in part because of costs associated with its $4.3 billion acquisition of Vanguard Health Systems. Delphi Automotive dropped after the company cut its earnings forecast for the year.
The market is still close to record levels after a surge that has put the Standard & Poor’s 500 index on track for its best performance since 2009. Stocks have gained this year as the Federal Reserve kept up its stimulus program to help the U.S. economy recover.
The S&P 500 index fell four points, or 0.2 percent, to 1,763 as of 11:14 a.m. (1614 GMT). The index is eight points below its record close of 1,771, set Oct. 29.
The Dow Jones industrial average dropped 33 points, or 0.2 percent, to 15,606. The Nasdaq composite dropped three points, or 0.1 percent, to 3,933.
Overall, earnings for the third quarter have been better than analysts had forecast.
Earnings for S&P 500 companies are expected to grow by 5.2 percent in the July to September period, according to S&P Capital IQ. That’s quicker than the 4.9 percent growth recorded in the second quarter and the 2.4 percent growth in the same period a year ago.
About three-quarters of the companies in the S&P 500 have reported earnings, and stocks may now struggle to add to their gains in the short term, said Kristina Hooper, the head of U.S. Capital Markets Research & Strategy at Allianz Global Investors. Investors may also be underestimating the impact that last month’s 16-day partial government shutdown had on the economy.
“What’s concerning is what we’re seeing for the fourth quarter,” Hooper said. Company outlooks “suggest that we could see some damage from the shutdown.”
The overwhelming majority of earnings outlooks that companies have provided for the fourth quarter have been negative. Of the 78 companies that have provided investors with guidance, 60 have lowered their forecasts.
Tenet dropped $4.48, or 9 percent, to $43.77. That pared the stock’s gain this year to 35 percent. Delphi fell $2.66, or 4.5 percent, to $55.37.
Investors are also waiting for the Labor Department’s closely watched monthly jobs survey, which was delayed a week by the 16-day partial shutdown of the U.S. government. The report is due out Friday.
In government bond trading, the yield on the 10-year note climbed to 2.67 percent from 2.60 percent on Monday.
The yield rose as the Institute of Supply Management said the U.S. services sector accelerated in October despite the partial government shutdown, boosted by a jump in sales and more hiring.
In the commodities markets, the price of oil fell 86 cents, or 0.9 percent, to $93.69 a barrel. Gold edged down $5 to $1,309.70 an ounce.
Among other stocks making big moves:
— Fastenal dropped $2.51, or 4.8 percent, to $49.39 after the industrial and construction supplies company rescheduled a sales and revenue release for next month.
— CVS Caremark rose $1.49, or 2.4 percent, to $63.47 after its third-quarter income climbed 25 percent, beating Wall Street expectations. The drugstore operator and pharmacy benefits manager also raised its 2013 earnings forecast.
— Regeneron jumped $14.67, or 5 percent, to $296.25 after the pharmaceutical company posted earnings that beat analysts’ expectations. The company also reported strong growth of its eye disease drug Eylea.