Lackluster earnings cool Wall Street rally
Wall Street`s rally paused on Wednesday after the latest bunch of earnings from companies, including AT&T and Boeing, failed to impress investors.
Earnings season so far has been largely positive, with more than 70 percent of the S&P 500 companies that have reported so far beating profit expectations.
However, with U.S. indexes at record levels, investors are taking a closer look at earnings to see if they justify the recent run-up in valuations.
Downbeat earnings from AT&T sent the U.S. No. 2 wireless carrier shares down 4.2 percent, dragging down the S&P 500 index.
Boeing surprised investors by revealing a $329 million charge for its troubled KC-46 aerial refueling tanker program in quarterly results. Its shares slipped 1.64 percent
"We`re probably due for a pause. At this point, rising earnings are the lifeblood to the market," said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company.
"At some point, nothing goes straight up, so there has to be a moment of consolidation."
The S&P and the Dow were headed to record their biggest single-day percentage losses since Sept. 9.
The CBOE Volatility index, Wall Street`s fear gauge, jumped 0.93 points to 12.09, its highest since Sept. 8.
Sentiment was also hit after the Wall Street Journal reported that Republicans are still weighing adjustments to a popular retirement-savings program.
"The 401k issue is causing some confusion because it is directly contradicting the President and the market doesn`t like confusion," said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.
At 11:29 a.m. ET (1529 GMT), the Dow Jones Industrial Average was down 104.36 points, or 0.45 percent, at 23,337.4, the S&P 500 was down 17.95 points, or 0.70 percent, at 2,551.18 and the Nasdaq Composite was down 63.47 points, or 0.96 percent, at 6,534.96. All the 11 major S&P sectors were lower.
AMD shares fell 10 percent after the chipmaker flagged competitive pressures with a forecast that pointed to a drop in revenue in the fourth quarter from the third.
Chipotle plunged 15 percent after the burrito chain posted disappointing sales and earnings.
Among gainers was Anthem, which rose 5.62 percent after reporting better-than-expected profit.
Northrop Grumman jumped about 4 percent after the defense contractor raised full-year profit forecast and reported higher quarterly profit and revenue, boosted by strength in its aerospace business.
Declining issues outnumbered advancers on the NYSE by 2,456 to 406. On the Nasdaq, 2,177 issues fell and 594 advanced.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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