Stocks Fall in Wobbly Trade 04/25 12:30
U.S. stocks are wobbling and trading mostly lower Wednesday as investors
continued to worry that growing costs for critical materials along with rising
interest rates will affect profit growth for companies.
NEW YORK (AP) -- U.S. stocks are wobbling and trading mostly lower Wednesday
as investors continued to worry that growing costs for critical materials along
with rising interest rates will affect profit growth for companies. U.S. bond
yields are rising again and setting four-year highs while oil prices are at
three-year highs. Stock indexes in Europe and Asia are also falling after U.S.
indexes took a steep drop the day before.
KEEPING SCORE: The S&P 500 index slipped 2 points, or 0.1 percent, to 2,632
as of 1:05 p.m. Eastern time. The Dow Jones industrial average fell as much as
201 points at the open but later recovered to trade down 45 points, or 0.2
percent, at 23,978. The 30-stock index has fallen for five days in a row, its
longest losing streak in more than a year. The Nasdaq composite declined 3
points, or 0.1 percent, to 7,004. The Russell 2000 index of smaller-company
stocks dipped 3 point, or 0.2 percent, to 1,549.
Almost two-thirds of the stocks on the New York Stock Exchange were trading
lower. Banks took some of the largest losses. Technology, health care and
industrial companies also declined. Those stocks tend to do better in times of
faster economic growth.
PAYING THE COST: Stocks slumped Tuesday after heavy machinery maker
Caterpillar said it doesn't expect to top its first-quarter earnings for the
rest of this year. Company profits fuel the stock market, and when they are
rising, stocks tend to do well. Investors expected strong profit growth this
year thanks to the growing global economy and the corporate tax cut President
Donald Trump signed at the end of 2017. That optimism helped send stocks to
record highs in January.
The comments from Caterpillar's executives, as well as from other major
companies like 3M and Sherwin-Williams, had investors worrying about whether
that growth will show up. On Wednesday Goodyear Tire & Rubber said higher raw
materials costs and weaker demand hurt its business in the first quarter. Its
stock fell 4.9 percent to $25.55.
ON THE DEFENSIVE: Defense contractor General Dynamics shed 3.5 percent to
$214.23 and Northrop Grumman slipped 2.1 percent to $334.35 as their
first-quarter reports failed to excite investors. Lockheed Martin, which
tumbled following its report Tuesday, fell another 2.3 percent to $328.88 and
Raytheon declined 1.7 percent to $215.
Citi Investment Research analyst Jonathan Raviv said Northrop Grumman and
Lockheed Martin reported good results but didn't raise their forecasts for how
much cash they will make. He said the companies were likely just being
cautious, but investors were concerned.
ON THE MOVE: Aerospace company Boeing topped Wall Street's estimates and
raised its forecasts for the year. Boeing rose 2.5 percent to $337.21. Railroad
operator Norfolk Southern also climbed 5.5 percent to $142.42 after it, too,
surpassed analyst projections. That helped pull other industrial companies
BONDS: Investors may have also been worried about rising interest rates,
which tend to slow down economic growth by making it more expensive for people
and companies to borrow money. Bond prices fell again Wednesday, sending yields
higher. The yield on the 10-year Treasury note kept setting four-year highs as
it rose to 3.02 percent from 3 percent.
Low interest rates have played an important role in the economic recovery of
the last decade, and the yield on the 10-year note is a benchmark for many
kinds of interest rates including mortgages. It's been climbing because
investors expect higher economic growth and inflation. While investors expect
the Federal Reserve to raise interest rates two more times this year, growing
numbers of them now expect it to raise rates a third time after that.
SKY TUSSLE: Media conglomerate Comcast offered to buy British broadcaster
Sky for $30 billion. Sky had previously accepted a $16.5 billion offer from
21st Century Fox, but British regulators haven't approved the deal. They are
investigating whether Fox's bid for Sky would give Murdoch and his family,
which owns several other media titles in the U.K., too much control over the
country's news media.
Comcast also had a stronger first quarter than analysts expected, although
it continued to lose cable subscribers. Its stock jumped 2.9 percent to $34.33.
Sky gained 3.9 percent in London. Fox rose 2.2 percent, to $36.80, while
Disney, which plans to buy most of Fox's entertainment assets, climbed 1.9
percent to $101.36.
OVERSEAS: Germany's DAX fell 1.3 percent and Britain's FTSE 100 lost 0.9
percent. France's CAC 40 was down 0.7 percent. Japan's benchmark Nikkei 225
shed 0.3 percent. Hong Kong's Hang Seng lost 1.1 percent and the South Korean
Kospi lost 0.6 percent.
CURRENCIES: The dollar rose to 109.26 yen from 108.67 yen. The euro fell to
$1.2188 from $1.2237.
COMMODITIES: Benchmark U.S. crude oil lost 12 cents to $67.58 in New York.
It's up 32 percent over the last 12 months and trading at its highest price in
more than three years. Brent crude, used to price international oils, fell 37
cents to $73.4 a barrel in London.
Gold fell 0.7 percent to $1,323.70 an ounce and silver sank 1.1 percent to
$16.52 an ounce.