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Another turbulent trading session ended with a mixed picture on Tuesday as new data revealing consumer confidence unexpectedly tumbled to six-month lows pushed the Nasdaq Composite down more than 1% but rallying energy stocks ended the Dow’s two-day plunge.
Today's Markets
The Dow Jones Industrial Average rose 14.21 points, or 0.14%, to 9882.17, the S&P 500 fell 3.54 points, or 0.33%, to 1063.41 and the Nasdaq Composite sank 25.76 points, or 1.20%, to 2116.09.The consumer-friendly FOX 50 gained 0.44 points, or 0.06%, to 780.54.
Even though stocks ended in a stalemate, Wall Street remains mired in a slump as the S&P 500 has slid for three straight days in the face of another round of better-than-expected earnings reports and a fourth consecutive month of home price increases.It's clear the recent selling has taken a toll on market psychology.
“These one-day reversals, which have been pretty much to the downside, have taken a lot of enthusiasm out of the market. A lot of people are getting a little nervous here,” NYSE trader Ted Weisberg of Seaport Securities told FOX Business.
The bears' long-standing argument that stocks have gotten too far ahead of the economy may finally be gaining steam, with the Dow struggling to stay above the 10000 level. Much to analysts' surprise, the benchmark index hasn't suffered a 5% correction during its entire 3,600-point surge off the March lows but is now off more than 225 points from its 2009 highs.
Half of the blue-chip index's 30 components closed in the green despite the confidence report, led by American Express (AXP) and energy titans Chevron (CVX) and ExxonMobil (XOM). On the other hand, Walt Disney (DIS) and Alcoa (AA) were the Dow biggest percentage decliners.
The Nasdaq Composite lost about 1% as tech giants like Amazon.com (AMZN) and BlackBerry maker Research in Motion (RIMM) slid. Tech stocks came under heavier pressure than the broader markets as Chinese search engine Baidu.com (BIDU) plunged more than 11% after reporting weaker-than-expected quarterly revenue and issuing cautious guidance for the current quarter.
Tuesday's session took a negative tone after the Conference Board released its consumer confidence report, which showed confidence sank from an upwardly revised 53.4 in September to 47.7 this month -- the lowest level since April.Economists had been forecasting a smaller decline to 53.1. On the upside, October marked the first time since August 2007 that confidence was up on a year-over-year basis.
The markets closely watch confidence data as they can be a good indicator of consumer spending, which makes up 70% of U.S. GDP. While housing and manufacturing reports have improved significantly in recent months, consumer confidence and the labor markets have lagged behind, threatening to slow the economic recovery. Underscoring the concern on Wall Street, the consumer discretionary sector was the biggest drag on stocks, sinking 1.7%. Individual stocks such as Expedia.com (EXPE) and Apple (AAPL) saw even heavier selling.
Also on the economic front, the markets received just a fleeting boost from the S&P Case-Shiller home price index, which showed that housing prices in the nation's 20 largest cities increased in August by 1.2% from July, better than the 0.6% increase that economists were looking for. It was the fourth consecutive monthly increase in home prices. Home prices were off 11.3% from a year ago, topping analysts' forecast for a decline of 11.9%.
Another potential concern for the bulls is the fact that the dollar posted solid gains for the second consecutive day, gaining back some of its recent selloff against the euro. The weaker dollar had provided a tailwind to the markets in recent weeks as it makes U.S. exports cheaper and increases demand for commodities.
Despite the stronger dollar, crude oil climbed back above $79 a barrel, boosting the energy sector by almost 1%. After suffering its worst selloff since Sept. 24., crude rose 87 cents a barrel, or 1.11%, to $79.55. Gold fell $7.40 an ounce, or 0.71%, to $1034.70.
A number of companies reporting better-than-expected profit and revenue figures on Tuesday saw their stocks tumble nevertheless, includingTD Ameritrade (AMTD), Wynn Resorts (WYNN), U.S. Steel (X) and AK Steel (AKS).
Corporate Movers
Valero (VLO) disclosed a deeper-than-expected non-GAAP quarterly profit of 39 cents per share amid lower oil prices. However, the largest U.S. refiner said its revenue fell 46% to $19.5 billion, which is well ahead of the Street’s view of $18.8 billion.
U.S. Steel (X) disclosed its third-straight quarterly loss but the largest North American steelmaker’s loss of $2.11 per share easily beat the Street’s view for a loss of $2.87. U.S. Steel’s revenue plunged 61% to $2.82 billion but that too topped estimates. Even though it said it believes the global economies are in “the early stages of a global recovery," U.S. Steel forecasted a fourth-quarter loss.
AK Steel (AKS) suffered a 97% plunge in third-quarter earnings but the results managed to exceed Wall Street’s expectations. The Ohio-based steelmaker said it earned 6 cents a share last quarter, compared to a profit of 1 cent per share analysts had projected. AK Steel’s revenue slid 52% to $1.04 billion, topping estimates.
Wynn Resorts (WYNN) blew away analysts’ forecasts with non-GAAP EPS of 33 cents, compared to the Street’s view of 15 cents. The casino operator’s revenue rose to a better-than-expected $773.1 million but its stock closed sharply lower amid concerns about its Macau operations.
TD Ameritrade’s (AMTD) quarterly profits fell 8.9% but the No. 2 U.S. online broker’s EPS of 26 cents exceeded Wall Street’s projections. The company’s revenue climbed 1.3% to $657.9 million, narrowly topping expectations. Looking ahead, TD sees fiscal 2010 EPS of $1.10 to $1.40, compared to the Street’s view of $1.29.
Honda Motor (HMC) reported a 57% drop in quarterly profit as the Japanese auto maker was hurt by weak global demand for cars and trucks and a stronger Japanese Yen. The second-largest Japanese auto manufacturer reported a better-than-expected net profit of $587 million even as its sales tumbled 27%. Honda also nearly tripled its full-year profit forecast.
Daimler (DAI) reported a 27.5% skid in quarterly profit as the German auto maker’s sales slumped more than 20%. The maker of Mercedes Benz cars and trucks said it earned before interest and tax 470 million euro ($698 million) in its third quarter, down from 648 million euro from a year ago.
Textron (TXT) beat the Street with EPS of 1 cent and revenue of $2.55 billion. Analysts had been expecting the defense contractor and builder of Cessna aircraft would post a loss of 3 cents a share. Cessna sales plunged nearly 90% in the quarter on extremely weak demand for private aircraft.
Global Markets
European markets ended mixed. London's FTSE 100 gained 0.18% to 5200.97 but Paris' CAC 40 fell 0.01% to 3743.95 and Frankfurt, Germany's DAX sank 0.13% to 5635.02.
Asian markets tumbled overnight on the heels of the slide on Wall Street. Tokyo's Nikkei 225 slipped 1.45% to 10,212.46, Hong Kong's Hang Seng dropped 1.86% to 22,169.59 and China's Shanghai Composite plunged 2.83% to 3021.46.
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