AFP, New York :
After a strong opening for the second-quarter reporting season, US stocks reversed course on a raft of earnings disappointments as Wall Street succumbed to lack of confidence this week.
Traders also bared their doubts about the US economy’s breakaway from the rest of the globe on Friday, when shares sank more than one percent after poor data on China drove down especially oil and other commodity-tied companies.
For the week, the Dow Jones Industrial Average lost 2.9 percent at 17,568.53, and broader S&P 500 fell 2.2 percent to 2,079.65.
The Nasdaq began the period looking like it would buck the trend on the back of the two largest US companies, Apple and Google. The Nasdaq Composite struck a new record close of 5,218.86 on Monday.
But investors tossed in that towel, too, dumping Apple shares on Wednesday after its “only” 38 percent gain in net income in the quarter ending June 27, to $107 billion. Apple ended up losing 4.0 percent for the week, and dragging down Google, the previous week’s earnings king, 7.3 percent.
By the end of the week, then, the Nasdaq Composite had given up 2.3 percent at 5,088.63.
Friday’s sell-off came despite a 10 percent gain by Amazon-which surprised with a modest profit in the second quarter and became larger by market capitalization than the country’s largest traditional retailer, Walmart.
The market also found little happiness in the $54 billion merger of Anthem and Cigna which will establish the largest US health insurer. “An unexpected decline in US new home sales and a disappointing read on Chinese manufacturing output sapped sentiment,” said Charles Schwab & Co.
That could be true, but it also suggested that bullishness was already in short supply on the Street.
“There were far more losers on Friday than winners as economic slowdown concerns and valuation concerns got the better of market participants,” said
Briefing.com.
The earnings picture for the broader market has been mixed. Many companies have beat profits forecasts, but failed to show strength in revenue gains and other indicators of growth, according to Briefing.com.
That included companies like Caterpillar, 3M, McDonald’s, American Express, and Microsoft. Apple’s sell-off Wednesday was largely because iPhone sales growth did not match a very high estimate from analysts.
“The problem continues to be that, at 2,120 points, the S&P is overvalued,” said Hugh Johnson of Hugh Johnson Advisors.
“It’s hard to make the case that earnings are strong enough to take us through that level. So long as we have generally negative earnings, or low positive numbers, it’s going to be hard to make a move up for stocks.”
After a strong opening for the second-quarter reporting season, US stocks reversed course on a raft of earnings disappointments as Wall Street succumbed to lack of confidence this week.
Traders also bared their doubts about the US economy’s breakaway from the rest of the globe on Friday, when shares sank more than one percent after poor data on China drove down especially oil and other commodity-tied companies.
For the week, the Dow Jones Industrial Average lost 2.9 percent at 17,568.53, and broader S&P 500 fell 2.2 percent to 2,079.65.
The Nasdaq began the period looking like it would buck the trend on the back of the two largest US companies, Apple and Google. The Nasdaq Composite struck a new record close of 5,218.86 on Monday.
But investors tossed in that towel, too, dumping Apple shares on Wednesday after its “only” 38 percent gain in net income in the quarter ending June 27, to $107 billion. Apple ended up losing 4.0 percent for the week, and dragging down Google, the previous week’s earnings king, 7.3 percent.
By the end of the week, then, the Nasdaq Composite had given up 2.3 percent at 5,088.63.
Friday’s sell-off came despite a 10 percent gain by Amazon-which surprised with a modest profit in the second quarter and became larger by market capitalization than the country’s largest traditional retailer, Walmart.
The market also found little happiness in the $54 billion merger of Anthem and Cigna which will establish the largest US health insurer. “An unexpected decline in US new home sales and a disappointing read on Chinese manufacturing output sapped sentiment,” said Charles Schwab & Co.
That could be true, but it also suggested that bullishness was already in short supply on the Street.
“There were far more losers on Friday than winners as economic slowdown concerns and valuation concerns got the better of market participants,” said
Briefing.com.
The earnings picture for the broader market has been mixed. Many companies have beat profits forecasts, but failed to show strength in revenue gains and other indicators of growth, according to Briefing.com.
That included companies like Caterpillar, 3M, McDonald’s, American Express, and Microsoft. Apple’s sell-off Wednesday was largely because iPhone sales growth did not match a very high estimate from analysts.
“The problem continues to be that, at 2,120 points, the S&P is overvalued,” said Hugh Johnson of Hugh Johnson Advisors.
“It’s hard to make the case that earnings are strong enough to take us through that level. So long as we have generally negative earnings, or low positive numbers, it’s going to be hard to make a move up for stocks.”
