S&P 500 and DAX Down on Growth Worries and Lackluster Earnings

Nichole Harper
27 Oct, 2015
New York City

Indexes on Wall Street remained in consolidation phase as more companies announce earnings. Durable spending declined for the second month in a row in September, raising the prospect of a sharp slowdown in the U.S. economic growth. Walgreens agreed to acquire Rite Aid for $9.4 billion in cash.

[R][4:10 PM New York City, New York – Market indexes on Wall Street remained in consolidation phase as more companies announce earnings. Durable spending declined for the second month in a row in September, raising the prospect of a sharp slowdown in the U.S. economic growth. Walgreens agreed to acquire Rite Aid for $9.4 billion in cash.[/R]

Market indexes in New York and in Europe traded lower and investors digested a barrage of earnings report across Atlantic.

Weaker-than-expected earnings from Ford Motor Company and other companies knocked market sentiment. In addition, durable spending declined for the second month in a row, raising the prospect of sharp economic growth.

Durable goods orders in September fell 1.2% to $231.1 billion and declined for the second month in a row followed by 3% fall in August.

Orders excluding transportation fell 0.4% and defense dropped 2%, the Department of Commerce said.

On Wall Street, Tollbooth Strategy Index slipped 115.33 or 1.1% to 10,832.46.

S&P 500 index fell 9.97 or 0.5% to 2,061.49 and the Nasdaq Composite Index slid 15.39 or 0.3% to 5,018.63.

Crude oil in New York dropped $1.07 to $42.91 a barrel and gold rose $3.18 to $1,166.22 an ounce.

U.S. Movers

Ford Motor Company ((F)) slumped 4.7% or 73 cents to $14.95 after the auto maker reported revenues in the third-quarter ending in September jumped 9.1% from a year ago to $35.8 billion.

Net income in the quarter more than double to $1.91 billion or 48 cents per diluted share compared to $835 million or 45 cents from the same quarter last year.

The company revenues in North America surged 89% to $2.7 billion from a year ago. Revenues in Europe soared 17% but fell in South America, the Middle East and Asia.

Ford reaffirmed forecast to report full-year pre-tax profit between $8.5 billion and $9.5 billion.

Merck & Co., Inc ((MRK)) rose 37 cents to $53.20 after the health care company said revenues in the third-quarter ending in September declined 5% from a year ago to $10.07 billion.

Net income in the quarter doubled to $1.83 billion or 64 cents per diluted share compared to $895 million or 31 cents from the same quarter last year.

Merck lifted earnings per share forecast for the year between $3.55 and $3.60 from the earlier estimated range of $3.45 to $3.55 per share.

Pfizer Inc ((PFE)) increased 2.1% or 71 cents to $34.87 after the biopharmaceutical company reported revenues in the third-quarter ending in September slipped 2% from a year ago to $12.09 billion.

Net income in the quarter plunged 20% to $2.13 billion or 34 cents per diluted share compared to $2.67 million or 42 cents from the same quarter last year.

Walgreens Boots Alliance ((WBA)) soared 5.9% or $5.30 to $94.78 after the drug store chain agreed to buy Rite Aid Corporation.

Walgreens is schedule to release its fourth-quarter result tomorrow and Rite Aid Corporation stock surged 39.2% to $8.46.

European Markets

The seasonally adjusted U.K. service sector index jumped 2.8% in August from a year ago month. The largest contribution was from business services, finance, distribution, hotels and restaurants.

Between July and August, service sector output was flat following an increase of 0.2% between June and July, Office of the National Statistics reported.

Separately, the agency said U.K. GDP in preliminary estimate showed a decline in the third-quarter to 0.5% from 0.7% in second-quarter and from 2.3% in a year ago period.

Manufacturing output slid 0.3%, production output grew 0.3% and construction output fell 2.2%. Energy output rose 0.2% and mining output jumped 2.4%. Service output grew 0.7%.

In London trading, FTSE 100 index slipped 26.52 or 0.4% to 6,390.47 and in Frankfurt the DAX index fell 52.29 or 0.5% to 10,748.32.

In Paris, CAC 40 index decreased 32.62 or 0.7% to 4,864.43.

BP Plc fell 0.4% to 382.60 pence after the U.K.-based oil and gas producer said total revenues in the third-quarter ending I September declined 41% from a year ago to $55.88 billion.

Net profit in the quarter tumbled from a year ago to $56 million compared to $1.32 billion and diluted earnings per share plunged to 25 cents from $6.97.

The company estimated capital spending will drop between $17 billion and $19 billion per year through 2017.

BP also plans for divestment of asset worth about $3 billion to $5 billion in fiscal 2016.

BASF SE plunged 5.5% to €72.37 after the Germany-based chemicals maker reported revenues in the third-quarter ending in September declined 4.8% from a year ago to €17.27 billion.

Profit in the quarter surged 19.2% form a year ago to €1.21 billion compared to €1.01 billion diluted earnings per share increased to €1.31 from €1.11.

Novartis AG dropped 1.5% to 89.20 Swiss francs after the Switzerland-based pharmaceutical company reported net sales in the third-quarter ending in September declined 5.5% from a year ago to $12.27 billion.

Net income in the quarter plunged 41.6% from a year ago to $1.81 billion compared to $3.10 billion and diluted earnings per share jumped to 75 cents from $1.27.

The company agreed to pay $390 million to resolve a lawsuit alleging that the company boosted prescription volumes for the medicines to the specialty pharmacies.

Asian Markets

Stocks in Tokyo edged lower and investors digested latest batch of earnings.

The Nikkei 225 Stock Average slumped 170.08 or 0.9% to 18,777.04 and the broader Topix index dropped 15.88 to 1,543.11.

The yen strengthened to 120.37 against a dollar.

Nippon Life nearing a deal to acquire life insurance business of National Australia Bank Ltd. Seven & I Holdings jumped after a U.S. based activist investor takes a stake in the retailer. Shin-Etsu reported domestic silicone capacity expansion plan.

Shin-Etsu Chemical Co Ltd dropped 1.3% to 6,938 yen after the chemicals producer reported net sales in the first-half ending in September soared 7% from a year ago to 645.84 billion yen.

Net income in the period surged 13.4% to 76.63 billion yen compared to 67.59 billion yen and diluted earnings per share rose to 179.91 yen from 158.73 yen.

The company forecasted annual net sales to increase 1.2% to 1.27 trillion yen and net income to jump 8.9% to 140 billion yen.

The president, Shunzo Mori said the chemical maker plans to invest as much as 20 billion yen domestically to expand its silicones business and invest additional 12 billion yen at the Gunma complex for new production facilities and 3 billion yen in paint related products.

Stocks in Mumbai traded lower and largest automaker Maruti reported better–than-expected earnings.

Rupee weakened 1 paisa to 64.96 against one U.S. dollar.

The Sensex Index dropped 108.52 or 0.4% to close at 27,253.44. The CNX Nifty fell 27.65 or 0.3% to 8,232.90.

Maruti Suzuki, the largest automaker said quarterly profit soared 42% on 13% increases in revenues.