Wall Street pulls plug on two-day rally; mostly lower as earnings disappoint
Wall Street pulls plug on two-day rally; mostly lower as earnings disappoint
By: Kate Gibson | Markets Writer
U.S. stocks closed mostly lower on
Thursday, with the S&P 500 slipping from its record, as Best Buy Co.
fell sharply and Wall Street measured results from corporations
including Goldman Sachs Group and Citigroup.
"The market is searching for what the trend line is for the fourth-quarter earnings releases; the earnings we've seen so far I'd call mixed," said Jim Russell, senior equity strategist for US Bank Wealth Management.
"There's a shift from the rising tide lifting all boats in 2013 related to the Fed policy of QE to much more disparity between winners and losers, which we're starting to see in the retail area and the financial area. Some are able to execute in this slow-growth environment, others maybe not," Russell added.
Goldman Sachs reported a 21 percent drop in quarterly profit; Citigroup posted a lower-than-expected quarterly profit; CSX posted a 5 percent drop in quarterly profit. Shares of all three fell. Best Buy declined 28 percent after the consumer-electronics chain reported a decline in holiday sales.
The retail sales report earlier in the week "showed the economy was moving forward, driven by two-thirds of the economy, which is the consumer," said Andrew Wilkinson, chief market analyst at Interactive Brokers. But within that report, department stores proved to be one of the few areas with a year-over-year decline, which Wilkinson said "comes back to bite us today with the news from Best Buy."
But the trend "is not symptomatic of the health of the consumer, but that people are continuing to migrate to online purchases," said Wilkinson.
Thursday's fall is in large part a consolidation of the gains that came the prior two days, both Russell and Wilkinson said.
"The market is searching for what the trend line is for the fourth-quarter earnings releases; the earnings we've seen so far I'd call mixed," said Jim Russell, senior equity strategist for US Bank Wealth Management.
"There's a shift from the rising tide lifting all boats in 2013 related to the Fed policy of QE to much more disparity between winners and losers, which we're starting to see in the retail area and the financial area. Some are able to execute in this slow-growth environment, others maybe not," Russell added.
Goldman Sachs reported a 21 percent drop in quarterly profit; Citigroup posted a lower-than-expected quarterly profit; CSX posted a 5 percent drop in quarterly profit. Shares of all three fell. Best Buy declined 28 percent after the consumer-electronics chain reported a decline in holiday sales.
The retail sales report earlier in the week "showed the economy was moving forward, driven by two-thirds of the economy, which is the consumer," said Andrew Wilkinson, chief market analyst at Interactive Brokers. But within that report, department stores proved to be one of the few areas with a year-over-year decline, which Wilkinson said "comes back to bite us today with the news from Best Buy."
But the trend "is not symptomatic of the health of the consumer, but that people are continuing to migrate to online purchases," said Wilkinson.
Thursday's fall is in large part a consolidation of the gains that came the prior two days, both Russell and Wilkinson said.
| Name | Price | Change | %Change | ||
|---|---|---|---|---|---|
| DJIA | Dow Jones Industrial Average | 16417.01 | -64.93 | -0.39% | |
| S&P 500 | S&P 500 Index | 1845.89 | -2.49 | -0.13% | |
| NASDAQ | Nasdaq Composite Index | 4218.69 | 3.80 | 0.09% |
After a 106-point drop, the Dow Jones Industrial Average ended lower. UnitedHealth Group
paced blue-chip losses that extended to 22 of its 30 components. The
insurer fell 2.6 percent after reporting an increase in fourth-quarter
profit. "We think the key topic today will be how much the worse
Medicare Advantage rate outlook for next year would negatively impact
2015 EPS growth," Carl McDonald, a Citi analyst, wrote in a note about
United.
The S&P 500 also lost round.
Wavering between gains and losses, the Nasdaq ended with a slight gain.
The S&P 500 also lost round.
Wavering between gains and losses, the Nasdaq ended with a slight gain.
What to watch with Intel
CNBC's Josh Lipton reports what to look for ahead of Intel's earnings report after today's closing bell.
The dollar fell against other global currencies and the 10-year Treasury yield declined by 5 basis points to 2.846 percent.
On the New York Mercantile Exchange, crude-oil futures for February delivery lost 21 cents, or 0.2 percent, to $93.96 a barrel. Gold futures for February delivery rose $1.90, or 0.2 percent, to finish at $1,240.20 an ounce.
Economic reports Thursday had fewer Americans filing applications for jobless benefits last week, and the cost of living climbing 0.3 percent in December, the largest increase since June. And, the National Association of Home Builders reported confidence among home builders declined a bit in January after spiking in December, while the Philadelphia Fed's manufacturing index edged higher to 9.4 in January from a revised 6.4 the prior month.
On the New York Mercantile Exchange, crude-oil futures for February delivery lost 21 cents, or 0.2 percent, to $93.96 a barrel. Gold futures for February delivery rose $1.90, or 0.2 percent, to finish at $1,240.20 an ounce.
Economic reports Thursday had fewer Americans filing applications for jobless benefits last week, and the cost of living climbing 0.3 percent in December, the largest increase since June. And, the National Association of Home Builders reported confidence among home builders declined a bit in January after spiking in December, while the Philadelphia Fed's manufacturing index edged higher to 9.4 in January from a revised 6.4 the prior month.
—By CNBC's Kate Gibson
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