Disappointing Earnings News Drags Stocks Lower
With
traders reacting negatively to the latest batch of earnings news,
stocks have moved notably lower in early trading on Friday. The major
averages have slid firmly into negative territory, adding to the losses
posted in the previous session.
The major averages have recently edged up off their lows for the young session but remain stuck in the red. The Dow is down 94.07 points or 0.7 percent at 13,454.87, the Nasdaq is down 20.14 points or 0.7 percent at 3,052.73 and the S&P 500 is down 7.99 points or 0.6 percent at 1,449.35.
The
early weakness on Wall Street comes on the heels of the release of
disappointing quarterly results from big-name companies such as
Microsoft (MSFT), General Electric (GE), and McDonald's (MCD).
After
the close of trading on Thursday, Microsoft reported fiscal first
quarter earnings that fell year-over-year due in part to the deferral of
some revenue related to the upcoming release of its Windows 8 operating
system. The software giant also reported revenues that fell by more
than expected.
Diversified conglomerate General Electric reported adjusted earnings that came in line with analyst estimates but on weaker than expected revenue growth.
McDonald's reported
third quarter earnings that fell year-over-year and came in below
analyst estimates. The fast food giant also reported weaker than
expected sales.
The losses on the day are partly offsetting the
gains posted earlier in the week, which came on the heels of some upbeat
earnings news and economic data.
Airline stocks have shown a notable move to the downside, dragging the NYSE Arca Airline Index down by 1.4 percent. With the loss, the index is pulling back off the three-month closing high that it set on Thursday.
Healthcare provider, brokerage, and chemical stocks have also come under pressure, while most of the major sectors are showing more modest moves to the downside.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Japan's Nikkei 225 Index and Hong Kong's Hang Index both inched up by 0.2 percent, China's Shanghai Composite Index edged down by 0.2 percent.
Meanwhile, the major European markets have all moved to the downside on the day. The U.K.'s FTSE 100 Index has dipped by 0.2 percent, while the French CAC 40 Index and the German DAX Index are both down by 0.6 percent.
In the bond market, treasuries have moved modestly higher after coming under pressure in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.1 basis points at 1.805 percent
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TSX Dips At Open Friday
Bay Street stocks
moved down at open Friday amid marginal selling across a variety of
sectors, with the S&P/TSX Composite Index shedding 22.31 points or
0.18 percent to 12,443.81.
BCE Inc. slipped 1.50 percent
after Canadian Radio-Television and Telecommunications Commission,
blocked its C$3.40 billion takeover of Astral Media, saying that the
deal is not in Canadian's best interest at would have left too much
industry control in one company's hands. Shares of Astral plummeted
about 20 percent to C$42.00.
Gold stocks were extending losses amid weak bullion prices. Allied Nevada Gold, Barrick Gold and Detour Gold were ticking lower, while Royal Gold was adding about 1 percent
In the oil patch, Niko Resources dived 6 percent and Trilogy Energy was down 2 percent. Bonterra Energy and Husky Energy were down about 1 percent each.
Meanwhile, Pacific Rubiales Energy and Suncor Energy added about 1 percent each.
The price of crude oil
was steady above $92 after TransCanada Corp. said yesterday that it has
shut down its major pipeline for moving Canadian crude to the central
U.S. The country's largest pipeline company, said the
590,000-barrel-a-day Keystone pipeline is expected to be shut for
three days as crews investigate the pipe. Crude for December delivery,
the most actively traded contract, added $0.27 to $92.80 a barrel.
The price of gold was
extending losses for a second session Friday morning as the euro was
struggling to move higher amid the ongoing European Union leaders'
two-day summit in Brussels. Gold for December shed $7.80 to $1,736.90 an
ounce.
In economic news Statistics Canada said consumer
prices rose 1.2 percent year-over-year in September as higher energy
prices led the advance in the Consumer Price Index (CPI). Meanwhile,
prices of passenger vehicles and for food purchased from stores moved
down y-o-y in September. Economists were expecting the inflation to rise
by 1.3 percent.
Meanwhile, the Bank of Canada's core
index rose 1.3 percent y-o-y in September, following a 1.6 percent
increase in August. The slower rate of increase was mostly attributable
to smaller price increases for the purchase of passenger vehicles.
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European Markets In Negative Territory
The European markets
are in the red in afternoon trading Friday, as the two-day European
summit is in progress in Brussels. Weak earnings report from technology
companies across the Atlantic also impacted sentiment.
The EU leaders on Thursday decided to phase in the Single Supervisory Mechanism (SSM) next year, retreating from its June decision to have it operational by January 1, 2013.
Meanwhile, French President Francois Hollande
reportedly said Friday that the European Union meeting in Brussels did
not discuss a potential aid request from Spain. Hollande warned against
imposing more austerity on Spain, if the country were to ask for a
bailout. He said that Spain is making all the necessary efforts to get
its public finances back in order.
The Euro Stoxx 50 index of eurozone bluechip stocks is falling 0.69 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is losing 0.40 percent.
The German DAX is declining 0.38 percent and the French CAC 40 is losing 0.41 percent. Switzerland's SMI is falling 0.05 percent and the UK's FTSE 100 is declining 0.26 percent.
In Frankfurt, Deutsche Bank is losing 2 percent and Commerzbank is falling 0.9 percent. Infineon Technologies and K+S are declining 1.6 percent and 1.3 percent, respectively. Siemens is losing 0.3 percent. Nomura initiated the stock with a "Neutral" rating.
Delticom is declining 6.8 percent, following a downgrade by Commerzbank. Rheinmetall is losing 1.6 percent. Commerzbank reinitiated the stock with a "Hold" rating. Outside the main index, SMA Solar is plunging 27 percent. BMW is advancing 3.1 percent. Volkswagen and Daimler are gaining around 1.1 percent.
In Paris, STMicroelectronics is declining 2.7 percent. Alstom is falling 2.5 percent after Nomura initiated the stock with a "Reduce" rating. Societe Generale, BNP Paribas and Credit Agricole are losing between 1.5 percent and 1 percent.
Carrefour
is climbing 6.8 percent. The retailer has agreed to sell its Colombian
operations to Chilean retail group Cencosud SA for an enterprise value
of $2.61 billion. Alcatel Lucent and Vallourec are gaining around 2.2
percent each.
In London, Aggreko is declining 9.4 percent.
The temporary power provider said margins and returns for the year will
be lower than 2011 due to high mobilization costs in Mozambique
contract and increase in bad debt provision. Bunzl is declining 4.5
percent after an interim management statement.
Llyods is losing 2.9 percent. Barclays is down 1.7 percent and Royal Bank of Scotland is falling 1.6 percent.
Construction firm Redrow is falling 6.8 percent while electronics manufacturer Spectris is climbing around 11 percent.
ING is losing 1.9 percent in Amsterdam. The firm has reached an agreement to sell some businesses in Hong Kong and Macau, and its life insurance operation in Thailand to Richard Li's Pacific Century Group for $2.14 billion in cash.
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Asian Stocks Fall On Profit Taking Amid Weak Earnings
Asian stocks
fell broadly on Friday, consolidating recent gains, after U.S. stocks
slipped overnight, weighed down by a disappointing earnings report from
Google. Microsoft and Advanced Micro Devices also reported quarterly
results that fell short of estimates, tempering investor optimism over
upcoming earnings reports. Media reports that China won't provide big
stimulus and weaker-than-expected U.S. jobless claims data also kept
investors at bay ahead of the weekend.
Meanwhile, a text of draft
conclusions on the first day of talks in the ongoing EU summit saw
leaders agreeing on a banking supervision deal, with the objective of
completing the legislative framework for the plan by January 1, 2013.
With regard to Greece, the policymakers urged the country to continue
budgetary and structural policy reforms in order to ensure its future in
the euro area.
Japanese shares rose for a fifth straight
session, boosted by signs of economic recovery in China and the yen's
continued decline against the dollar and the euro on expectations that
the Bank of Japan would ease its monetary policy further at its policy meeting later this month. The Nikkei average rose 0.2 percent, while the broader Topix index gained 0.3 percent. NEC soared
10.5 percent after the information technology company raised its
operating profit forecast for the first half of the fiscal year.
China-related Hitatchi Construction Machinery, Komatsu and Fanuc
rose 2-4 percent, while heavyweights Fast Retailing and Softbank lost
0.6 percent and 1.2 percent, respectively. Nissan Motor led the gainers
among automakers, rising 1.6 percent while Honda Motor gained 1.1
percent and Toyota Motor added 0.2 percent.
China's Shanghai
Composite index edged down 0.2 percent, but Hong Kong's Hang Seng rose
0.2 percent, helped by signs of stabilization in the mainland economy.
The MNI China Business Sentiment, a private sector survey of businesses
in 32 cities, showed an improvement in its reading to 51.52 in October
from 51.35 in September, adding to hopes for a rebound in the world's
largest economy.
Australian shares eked out modest gains despite a mixed performance elsewhere across the region. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index rose about 0.3 percent each. Miners ended mostly higher with Rio Tinto, BHP Billiton and Fortescue rising between 0.7 percent and 1.3 percent, while gold miner Newcrest
slid 1.6 percent. Atlas Iron soared 6.7 percent after it sought
financing to expand production capacity at its operations in the Pilbara
region.
Banks ended lower across the board, with ANZ, Westpac and National Australia Bank
losing 1-3 percent after NAB warned of weaker than expected full year
earnings, citing slower economic growth and the rise in bad loans.
Retailer Woolworths rose 1.3 percent after reporting a 2.3 percent rise in first-quarter same-store food and liquor sales. Rival Wesfarmers closed up 0.6 percent, while David Jones dropped 1.5 percent and Harvey Norman fell 2 percent.
Seoul
shares drifted lower as weaker results from Google and Microsoft
tempered the recent optimism surrounding the U.S. earnings season. The benchmark Kospi average fell 0.8 percent, dragged down by market heavyweight Samsung Electronics, which ended down 2.6 percent after four sessions of gains. LG Chemicals rose 0.9 percent ahead of its quarterly results.
New Zealand shares lost ground, dragged down by dual-listed lenders on looming concerns over weak household demand. The benchmark NZX-50 index slipped 0.3 percent. Australian & New Zealand Banking Group and Westpac
fell about 2 percent each, Fletcher Building, the nation's largest
construction company, lost 2.9 percent on profit taking after recent
steep gains and whiteware manufacture Fisher & Paykel Appliances
ended unchanged following Haier's revised takeover offer, while exporter
Fisher and Paykel Healthcare rose 2.2 percent. SkyCity
Entertainment Group added a percent after announcing normalized revenue
growth for the period to October 17.
Elsewhere, India's benchmark Sensex was moving down 0.8 percent, Indonesia's Jakarta Composite index slid 0.6 percent, Singapore's Straits Times index edged down 0.2 percent and the Taiwan Weighted average lost 0.8 percent, while Malaysia's KLSE Composite index edged up marginally.
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Crude Steady Above $92
The price of crude oil
was steady above $92 after TransCanada Corp. said yesterday that it has
shut down its major pipeline for moving Canadian crude to the central
U.S.
Light Sweet Crude Oil (WTI) futures for December
delivery, the most actively traded contract, edged up $0.01 to $92.11 a
barrel. Yesterday, oil settled almost flat after fluctuating for much of
the day on some mixed macroeconomic data from the U.S. and China. A
strengthening dollar and the more than expected increase in U.S. crude
stockpile also impacted crude prices, with investors wary of the outcome
from the ongoing European leaders summit meeting.
The price of gold was
extending losses for a second session Friday morning as the euro was
struggling to move higher amid the ongoing European Union leaders'
two-day summit in Brussels.
According to a draft statement after
Thursday's meeting, EU leaders have agreed to establish a single
supervisor for banks in euro area, with the objective of agreeing on the
legislative framework for the plan by January 1, 2013. With regard to
Greece, the policymakers urged the country to continue budgetary and
structural policy reforms in order to ensure its future in the euro
area.
Gold for December delivery, the most actively traded
contract, shed $9.80 to $1,734.90 an ounce. Yesterday, gold snapped its
two-session winning streak to settle lower on some mixed economic data
globally even as investors remained cautious ahead of the two-day summit
meeting of the European heads of state.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,333.89 tons.
This morning, the U.S. dollar was
leveling off from its one-month low versus the euro, while lingering
around a two-week low against sterling. The buck was hovering near its
2-month high versus the yen and ticking higher against the Swiss franc.
In
economic news from the euro zone, Germany's producer price inflation
accelerated in September, while economists expected it to remain
unchanged, data released by statistical office Destatis showed. The
producer price index advanced at a faster rate of 1.7 percent
year-on-year in September than August's 1.6 percent. Economists expected
the rate of growth to remain unchanged.
Traders will look to the existing home sales
report from the National Association of Realtors, due out at 10.00 a.m.
ET. Economists expect the sales to have eased to 4.75 million in
September from the last month's 4.82 million.
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