The stock markets in the United States dropped following the crash of a passenger airplane in Ukraine, which ignited concern that the conflict in the region may escalate.
The government in Kiev accused pro-Russian rebels of shooting down a Malaysian Airlines jet that killed all 295 people on board. The Russian rebels denied that accusation.
The airplane crashed in the main battleground of civil war in Ukraine. It appeared that Malaysian Airlines jet was one of the several aircrafts downed in the area. Last Monday, a Ukrainian An-26 cargo plane was shot down and late Wednesday, the Ukrainian Su-25 fighter jet crashed.
Commenting on the downward movement of the markets, Todd Lowenstein, a fund manager at Highmark Capital Management told Bloomberg, “People are selling out of fear.” According to him, the markets are “acute to geopolitical risk.” He added, “Given where valuations are and the move lately amid all the M&A activity, when you have some geopolitical shocks, people will look for a reason to sell.”
On the other hand, John Canally, an economic strategist at LPL Financial Corp commented, “Markets have to figure out if this is really an escalation of the conflict.” He noted that the situation in Ukraine started since February, and he thinks the situation is “kind of another wave of escalation.”
Meanwhile, stocks in emerging-markets also declined from a 16-month high after Russia suffered a huge decline since April and energy stocks fell due to new sanctions imposed by the United States. The European stock markets also dropped today.
- Dow Jones Industrial Average (DJIA)- 16,976.81 (-0.94%)
- S&P 500- 1,958.12 (-1.18%)
- NASDAQ- 4,363.45 (-1.41%)
- Russell 2000- 1,134.01 (-1.52 %)
- EURO STOXX 50 Price EUR- 3,157.82 (-1.41%)
- FTSE 100 Index- 6,738.32 (-0.68%)
- Deutsche Borse AG German Stock Index DAX- 9,753.88 (-1.44%)
- Nikkei 225- 15,379.26 (-0.06%)
- Hong Kong Hang Seng Index- 23,520.87 (-0.01%)
- Shanghai Shenzhen CSI 300 Index- 2,157.07 (-0.64%)
Stocks in Focus
AutoNation, Inc. (NYSE:AN) dropped more than 8% to $55.82 per share after the company reported second-quarter earnings that missed the estimates of Wall Street analysts. The largest U.S. new-vehicle retailer delivered earnings of $0.83 per share, lower that the $0.87 per share consensus estimate. Its revenue was $4.79 billion, in line with Street expectations.
The stock price of SanDisk Corporation (NASDAQ:SNDK) declined more than 14% to $92.10 per share despite reporting solid second-quarter results. Investors were disappointed with company’s revenue guidance for the third quarter that was lower than the consensus estimate. According to the company, it will not be able to meet all orders because it does not have enough inventories this quarter.
The shares of Yum! Brands Inc. (NYSE:YUM), the parent company of KFC and Taco Bell tanked nearly 7% to $77.01 per share. The company reported earnings of $0.73 per share, one cent lower than the $0.74 per share average Street estimate. Its revenue was $3.2 billion.