BackUS stocks slip from all-time high as investors weigh earnings
US stocks slipped from all-time high, as investors weighed the prospects for further gains following a mix of corporate earnings reports
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London/New York: US stocks slipped from all-time highs, as investors weighed the prospects for further gains following a mix of corporate earnings reports.
Netflix Inc. tumbled 14% on weaker-than-anticipated subscriber growth, and Philip Morris International Inc. dropped 3.9% after its earnings missed forecasts as the strong dollar hurt sales outside of the US Johnson & Johnson climbed 1% after reporting quarterly profit that beat estimates.
The S&P 500 Index declined 0.3% to 2,160.24 at 9:52am in New York, after closing at an all-time high for the fifth time in six days. The Dow Jones Industrial Average lost 19.34 points, or 0.1%, to 18,513.71, while the Nasdaq Composite Index fell 0.4%.
“We hit records and now it’s kind of cautiously moving forward," Larry Peruzzi, managing director of international equities at Mischler Financial Group Inc. in Boston, said by phone. “The economic numbers and earnings continue to come in but it’s definitely a slow trading environment. It’s a combination of Brexit, July and August always being a little light, and whenever the indexes are at higher levels people look for that next driver."
American shares recovered from their losses after the British vote to leave the European Union, with the S&P 500 taking its annual gain to 6% amid signs of strength in the economy and speculation that the Federal Reserve will push back the timing on interest-rate increases. While bets for a Fed move have crept up amid improving economic data, traders are still pricing in less than even odds of a move until mid-2017.
With a Citigroup gauge that tracks the degree to which data are exceeding economist projections at an 18-month high, a report today showed new-home construction rose more than forecast in June, providing some momentum for residential real estate near the end of its busy selling season.
Even as the earnings season has delivered more positive surprises than negative ones so far, analysts estimate net income at S&P 500 companies will drop 5.8% in the second quarter, which would make it a fifth straight decline, the longest streak since 2009. Microsoft Corp. reports results after the market closes.
The International Monetary Fund scrapped its forecast for a pickup in global growth this year, citing the Brexit vote, and warned the damage could worsen if confidence falters among investors and companies. The IMF sees global gross domestic product rising 3.1% this year, down from April’s 3.2% projection and equal to growth in 2015, according to the fund’s quarterly World Economic Outlook, released today. The 2017 forecast was cut to 3.4% from 3.5%.
“If the US market is at an all-time high and you have a day of waiting for news, investors trim exposure," said Ben Kumar, investment manager at Seven Investment Management LLP, which oversees £10 billion ($13 billion). Still, “the simple reason that the S&P 500 is at its all-time high is that the fear of a US recession has now vanished, markets are no longer predicting a long period of deflation, they are no longer worried that the jobs recovery is mythical, masking underlying weakness." Bloomberg
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