U.S. Indexes Drop 1.5% on Weak Earnings and Durable Goods Orders

Nichole Harper
27 Jan, 2015
New York City

Market indexes on Wall Street plunged more than 1.5% after disappointing durable goods orders and earnings from Caterpillar, Microsoft, United Technologies and Procter & Gamble. Oil and iron ore traded near six-year lows and euro and bonds in the euro zone were in focus.

[R]12:25 PM New York – Market indexes on Wall Street plunged more than 1.5% after disappointing durable goods orders and earnings from Caterpillar, Microsoft, United Technologies and Procter & Gamble. Oil and iron ore traded near six-year lows and euro and bonds in the euro zone were in focus.[/R]

U.S. market indexes fell sharply after durable goods orders fell more than expected and earnings from Microsoft and Caterpillar failed to meet expectations.

Durable goods orders decreased 3.4% in December after falling 2.1% in November, Commerce Department reported today.

Trading in stocks picked up pace after many securities industries professionals returned to work after staying away from work after travel ban in many cities in the North East.

The National Weather Service lifted the snow blizzard warning and a travel ban in the region. The subway service in the New York City resumed limited service around 9 a.m. local time.

Yield on 10-year U.S. Treasuries declined six basis points to 1.76% and stress in the euro zone market was evident in Greece.

Durable goods orders in December declined 3.4% to $230.5 billion followed by 2.1% decrease in November, Commerce Department reported today.

On Wall Street trading, Tollbooth Strategy Index dropped 1.1% or 114 to 10,056.08.

S&P 500 index declined 29.86 or 1.5% to 2,027.20 and the Nasdaq Composite Index dropped 84.80 or 1.8% to 4,687.38.

In addition, Russian bond yields rose 12 basis points to 15.39% and the dollar-denominated RTS stock market index declined 1.1% and ruble regained 1.1% after plunging 6.6% in Monday’s trading.

S&P, the U.S. based rating agency downgraded Russian government debt to BB+ with “negative” outlook, the first downgrade since April.

Oil prices traded near its six-year low despite OPEC chief commenting that price could surge above $100 a barrel without new investment in production.

West Texas Intermediate for March delivery increased 74 cents to $45.89 and gold rose $15.10 to $1.294.50 an ounce. Copper declined 3% to 245.45 cents and silver gained 4 cents to $18.12.

U.S. Movers

Caterpillar Inc ((CAT)) plunged 7.6% or $6.51 to $79.48 after the construction and mining equipment maker said sales in the fourth-quarter ending in December fell 1.1% to $14.24 billion from a year ago period.

Net income in the quarter declined 25% to $757 million or $1.23 a diluted share compared to $1 billion or $1.54 from the same quarter last year.

Procter & Gamble Co ((PG)) declined 3.8% or $3.43 to $86.16 after the consumer packaged goods maker net sales in the fourth-quarter ending in December slipped 4% to $20.16 billion from a year ago period.

Net income in the quarter tumbled 31% to $2.37 billion or 82 cents a diluted share compared to $3.43 billion or $1.18 from the same quarter last year.

European Markets

Bond market is feeling the upcoming Greek negotiation stress and the yield of 3-year bond rose 195 basis points to 14.01% and yield of 10-year bond rose 35 basis points to 9.48%.

The ASE Index in Athens declined 4.4% led by double-digits plunge in banking stocks.

National Bank of Greece SA, Alpha Bank AE and Eurobank Ergasias SA dropped more than 11%.

Yields were unchanged for 10-year German bond at 0.39% after falling to a record low of 0.336% at close on Monday.

Italy sold 2 billion euros of zero-coupon notes maturing in August 2016 at a record low yield of 0.281%. Treasury office in Rome also sold inflation-linked debt maturing in 2018 and 2041.

The Netherlands also sold long term debt maturing between two and thirty years at yields that are sharply lower than in the previous auction on November 11.

Dutch government raised 1.15 billion euros of bonds due in 2047 at a record low yield of 1.15% compared to 1.815% in the previous auction.

The euro edged up 0.5% to 74.86 U.K. pence after the country’s gross domestic product increased 0.5% in the December quarter.

Swiss franc declined 0.3% to 1.0179 to a euro after a Swiss National Bank policy maker suggested that the central bank is prepared to intervene in the market to defend the policy guideline.

Ericsson net plunged 35% to 4.2 billion kronor but sales rose 1%. Novartis net tumbled 26% to $1.5 billion and increase dividend for 2014. Philips net plummeted 68% to €134 million. Siemens profit tumbled 25% to €1.1 billion.

In London trading, FTSE 100 index slipped 0.8% or 54.53 to 6,797.87 and in Frankfurt the DAX index declined 1.2% or 134.14 to 10,664.19.

In Paris, CAC 40 index dropped 1.1% or 51.15 to 4,623.98.

Novartis AG gained 1.6% to 88.35 Swiss francs after the Switzerland-based healthcare solution provider reported net sales in the fourth-quarter ending in December dropped 2% to $14.63 billion from $14.93 billion a year ago period.

Net income in the quarter tumbled 26% from a year ago to $1.49 billion compared to $2 billion and earnings per share slipped 23% to 62 cents from 81 cents.

The healthcare company said it would increase dividend for 2014 to 2.60 francs per share compared to 2.45 francs per share in 2013.

Siemens AG declined 2.4% to €100.45 after the Germany-based industrial machinery maker reported revenues in the first-quarter ending in December jumped 5% to €17.42 billion from €16.58 billion a year ago period.

Net income in the quarter tumbled 25% from a year ago to €1.08 billion compared to €1.43 billion and diluted earnings per share declined to €1.28 from €1.68.

Asian Markets

Stocks in Tokyo rebounded and the yen eased following market advance in Europe after European finance ministers showed willingness to negotiate with the newly elected Greek leader.

Dai-ichi Life won the U.S. regulatory approval for the purchase of Protective Life.

Stocks in Tokyo closed higher and the yen eased following market advances in Europe after European finance ministers showed willingness to negotiate with the newly elected Greek leader.

The Nikkei 225 Stock Average climbed 299.78 or 1.7% to 17,468.52 and the broader Topix index jumped 24.30 to 1,426.38.

The yen dropped to close at 117.14 against one dollar.

The Sensex Index jumped 292.20 or 1% to close at 29,571.04. The CNX Nifty increased 74.90 or 0.9% to 8,910.50.

Market indexes in Mumbai opened higher and reached a new intra-day record and closed at a record high on a sustained investment flows from foreign investors.

Investors also took a positive view of the $4 billion of loans and business deals announced during his 3-day trip by the U.S. President Barack Obama and improving trade and business outlook between India and the United States of America.

Indian rupee closed at 61.39 against one dollar.

Maruti Suzuki India Limited advanced 2.1% to ₹3,685.20 after the largest vehicle maker reported net in the third-quarter climbed 17.76% to ₹802.16 crore.

Net revenues jumped 15.38% to ₹12,704.72 crore.