Wall Street stocks fall for third consecutive day
Wall Street stocks fell for a third successive day yesterday as investors assessed some disappointing earnings reports.
Allstate slumped to its biggest loss in more than five years after reporting a drop in profits that was worse than Wall Street analysts had been expecting.
NRG Energy was another company that disappointed investors, reporting a loss, when analysts had been expecting a small profit.
Stocks have been trading in a tight range for several weeks as investors wait to see if the economy strengthens sufficiently for the Federal Reserve to raise its benchmark interest rate for the first time in more than nine years.
But investors should not make the mistake of thinking that the market is in a summer slumber, said Kate Warne, an investment strategist at brokerage Edward Jones.
While energy stocks have plunged in response to falling oil prices, she noted, health care stocks are having another bumper year.
The Standard & Poor’s 500 index dropped 4.72 points, or 0.2%, to 2,093.32. The Dow Jones industrial average dropped 47.51 points, or 0.3%, to 17,550.69. The Nasdaq composite fell 9.84 points, or 0.2%, to 5,105.55.
Allstate was among the biggest decliners in the S&P 500. The insurer dropped 7.04 dollars, or 10%, to 62.34 dollars after reporting earnings that fell significantly short of analysts’ expectations.
The company said its earnings dropped because of more frequent and more severe car accidents.
NRG Energy dropped 2.23 dollars, or 10%, to 20.04 dollars.
A slump in Apple’s stock also weighed on the market.
Apple dropped for a fifth straight day after falling below a closely followed level that traders use to gauge the momentum of a stock.
The iPhone maker closed down 3.80 dollars at 114.64 dollars and has dropped 14% since closing at a record 133 dollars on February 23. That puts Apple in a correction, Wall Street parlance for price declines of 10% or more from a peak.
Almost 80% of the companies in the S&P 500 have now reported their second-quarter earnings, and average earnings for firms in the index are set to fall 0.2%.
If earnings do end lower the quarter lower, once all companies have reported, it would be the first quarter in almost six years that corporations have failed to grow their profits.
Still, many analysts are predicting that earnings will recover in the second half of the year as the economy strengthens.
“This is an earnings stall, not an earnings decline,” said Jeremy Zirin, head of investment strategy at UBS Wealth Management.
In energy trading, the price of oil rose on Tuesday, partially reversing Monday’s steep drop. US crude rose 57 cents to close at 45.74 dollars a barrel in New York, regaining some of the 1.95 dollars it lost on Monday.
Brent crude, a benchmark for international oils used by many US refineries, rose 47 cents to close at 49.99 dollars in London.
Despite the rebound in oil prices it is probably still too early to consider investing in oil stocks, said Anastasia Amoroso, a global market strategist at JPMorgan Funds.
That is because they still have not been able to adjust to the sharp drop in oil prices that started about a year ago.
“As much as oil companies are attempting to cut costs they cannot keep up with the drop in revenues,” she said. “For me, you need to see some further cost cutting by the energy companies.”
