Weak industrial earnings drag Wall Street lower
U.S. stocks were pulled lower on Thursday by downbeat earnings from industrial companies, including 3M, although strong results from marquee names Facebook and Microsoft kept the tech-heavy Nasdaq afloat.
3M Co shares tumbled 11.3% after the Post-It notes maker reported a lower-than-expected quarterly profit, cut its 2019 earnings forecast and said it would lay off 2,000 workers globally.
Industrials dropped 2%, also dragged down by a 7.9% fall in United Parcel Service Inc`s shares following the company`s disappointing earnings.
On the other hand, Facebook Inc jumped 5.6% after the social media giant`s quarterly profit blew past analysts` profit estimates.
Microsoft Corp rose 3.7%, briefly crossing $1 trillion in market value, after the software giant beat estimates for quarterly results and predicted continued growth for its cloud computing business.
"The information from 3M is an insight into industrial production, manufacturing and so on and that becomes a proxy for global growth than Facebook or even Microsoft, and that is stirring the markets a little bit," said Josh Wein, portfolio manager for Hennessy Funds in Chapel Hill, North Carolina.
"People are looking for a crack, they see 3M as a crack ... so the markets may sell off temporarily, but ultimately the sentiment remains positive."
Of the 178 S&P 500 companies that have reported so far, about 78% have topped profit estimates, according to Refinitiv data. The forecast for earnings have hugely improved from a 2.3% decline at the start of the season to a flat reading as of Thursday.
The S&P 500 has rallied this year, rebounding from a late-2018 slump, on hopes of a U.S.-China trade deal and a dovish tilt from the Federal Reserve. The index is 0.6% below its record high hit in late September.
At 11:18 a.m. ET the Dow Jones Industrial Average was down 207.39 points, or 0.78%, at 26,389.66, the S&P 500 was down 5.28 points, or 0.18%, at 2,921.97 and the Nasdaq Composite was down 0.74 points, or 0.01%, at 8,101.28.
Among the four S&P sectors trading higher was communication services index, boosted by Facebook.
The top decliner on the S&P 500 was Xilinx Inc, which tumbled 16.3% after the chipmaker`s quarterly gross margins fell short of estimates. The Philadelphia chip index dropped 2.3%.
Lam Research jumped 4.6% as the semiconductor equipment maker reported better-than-expected quarterly results.
Declining issues outnumbered advancers for a 2.38-to-1 ratio on the NYSE and a 2.14-to-1 ratio on the Nasdaq.
The S&P index recorded 15 new 52-week highs and four new lows, while the Nasdaq recorded 37 new highs and 37 new lows.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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