The stock markets in the United States declined as investors were disappointed with the financial results of International Business Machines and United Technologies.
The decline in the stock price of IBM and United Technologies primarily pulled the Dow Jones Industrial Average ((DJIA) to 17,926.77 points, down by 1%. The S&P 500 declined 0.43%, the NASDAQ dropped 0.21% and the Russel 2000 slid 0.40%.
Commenting on the market trends, Thomas Garcia, head of equity trading at Thornburg Investment Management told Bloomberg, “Right now it’s about earnings, where they’re coming in and what they’re seeing for next quarter; and when the Fed is going to eventually raise rates. If you look at the market valuation, it’s not off the chart, but it is priced for good earnings.”
On the other hand, Michael Antonelli, a managing director and institutional equity sales trader at Robert W. Baird & Co. noted that a “couple of fairly large names were weak and depressing” the sentiment today.
[drizzle]“You’re also brushing up against the top part of the trading range. A lot of people are looking toward Apple’s earnings to pull us out of this,” added Antonelli.
Approximately 25% of companies listed in the S&P 500 already reported its quarterly financial results this week. Analysts forecasted that the earnings of S&P 500 companies declined 5.3% in the second quarter.
- Dow Jones Industrial Average (DJIA) – 17,919.49 (-1.00%)
- S&P 500- 2,119.19 (-0.43%)
- NASDAQ- 5,208.12 (-0.21 %)
- Russell 2000- 1,255.18 (-0.40%)
- EURO STOXX 50 Price EUR- 3,647.96 (-1.05%)
- FTSE 100 Index- 6,769.07 (-0.29%)
- Deutsche Borse AG German Stock Index DAX- 11,604.80- (-1.12%)
- Nikkei 225- 20,841.97 (+0.93%)
- Hong Kong Hang Seng Index- 25,536.43 (+0.52%)
- Shanghai Shenzhen CSI 300 Index- 4,166.01 (+0.13%)
Stocks in Focus
The stock price of International Business Machines dropped nearly 6% to $163.08 per share, the biggest drop since October. The company posted earnings of $3.84 per share (excluding items), higher than the $3.78 per share consensus estimate. Its revenue was $20.8 billion, slightly lower than the $20.9 billion expected by analysts. Investors were primarily disappointed by IBM’s 35% decline in revenues from BRIC countries, and its failure to show that it can grow organically.
United Technologies dropped 7% to $102.71 per share after reporting second-quarter revenues that missed the expectations of Wall Street analysts. The company delivered $16.30 billion in revenues, lower than the $16.54 billion consensus estimate. Its earnings were $1.73 per share, one cent higher than the consensus estimate.
The shares of Caesars Entertainment surged more than 22% to $8.02 a piece. The company disclosed that it reached a restructuring agreement with some of the second-lien noteholders of its subsidiary, Entertainment Operating Company (CEOC).
LifeLock plummeted 49% to $8.20 per share after the Federal Trade Commission (FTC) filed a complaint against the company for violating its 2010 agreement with the agency and 35 state attorneys general.