Breaking News Bar
posted: 1/16/2014 4:59 PM

Weak earnings drag U.S. stocks mostly lower

hello
Success - Article sent! close
  • Stocks fell Thursday, after the Standard & Poor's 500 Index closed at a record a day earlier, as Best Buy Co. tumbled and earnings at companies from Citigroup Inc. to CSX Corp. disappointed investors.

      Stocks fell Thursday, after the Standard & Poor's 500 Index closed at a record a day earlier, as Best Buy Co. tumbled and earnings at companies from Citigroup Inc. to CSX Corp. disappointed investors.
    ASSOCIATED PRESS

 
Associated Press

NEW YORK -- A batch of negative company news gave investors something to fret over Thursday.

A day after eking out its first record high of 2014, the stock market lost ground Thursday as electronics retailer Best Buy, Goldman Sachs and Citigroup, and railroad operator CSX had disappointing earnings news.

Order Reprint Print Article
 
Interested in reusing this article?
Custom reprints are a powerful and strategic way to share your article with customers, employees and prospects.
The YGS Group provides digital and printed reprint services for Daily Herald. Complete the form to the right and a reprint consultant will contact you to discuss how you can reuse this article.
Need more information about reprints? Visit our Reprints Section for more details.

Contact information ( * required )

Success - request sent close

Consumer discretionary companies and banks fell the most.

The Standard & Poor's 500 index slipped 2.49 points, or 0.1 percent, to 1,845.89, retreating from the all-time high it hit the day before.

Best Buy fell the most in the S&P 500 index after the company reported a decline in sales during the crucial holiday season. Its shares plunged $10.74, or 29 percent, to $26.83.

Investors had high hopes that Best Buy, which has faced intense competition from companies like Amazon.com, would put itself back on track. The stock soared 236 percent last year. However, the company said Thursday that the aggressive price-matching policy it offered during the holidays backfired and sales fell 0.8 percent compared to a year ago.

Best Buy is not the only retailer to disappoint investors in the last week.

Bed Bath & Beyond, Family Dollar and Target all cut their full-year outlooks last week after a weak holiday season. The only bright spot in the retail industry was Macy's, and even it announced layoffs of 2,500 employees as part of a restructuring.

The Dow Jones industrial average fell 64.93 points, or 0.4 percent, to 16,417.01. The Nasdaq composite had a modest gain of 3.80 points, or 0.1 percent, to 4,218.69.

Goldman Sachs was the biggest drag on the Dow, falling $3.58, or 2 percent, to $175.17.

The bank reported a drop in fourth-quarter profit due to problems in its mortgages and bond trading division. However, Goldman's earnings did beat analysts' expectations.

The bond and mortgage businesses were also weak at Citigroup, whose results fell short of expectations. The stock dropped $2.39, or 4 percent, to $52.60.

The stock market is "fragile" right now, said Scott Clemons, chief investment strategist at Brown Brothers Harriman.

"If something were to go wrong, like if this earnings season continues to disappoint, I think any negative market reaction would be magnified," Clemons said. "The market is not as resilient as it was last year."

The company disappointments were not limited to retailers and banks.

CSX warned investors that it might be difficult to reach its own profit targets over the next two years because of ongoing weak demand for coal. The news pushed CSX down $1.99, or 7 percent, to $27.24. Other railroad stocks including Union Pacific and Norfolk Southern also fell.

It's still very early in earnings season. Roughly 70 members of the S&P 500 index report next week, including Microsoft, IBM, Delta Air Lines and McDonald's.

Quincy Krosby, a market strategist with Prudential Financial, said the market desperately needs companies to deliver on expectations this quarter and should find more direction next week once more companies release their results.

"We need the economic data and corporate earnings to be strong enough to support these valuations," Krosby said.

Investors retreated into traditional "safe havens" like government bonds, high-dividend stocks and gold. The yield on the 10-year Treasury note fell to 2.84 percent from 2.89 percent the day before. Bond yields fall as their prices rise.

Gold rose $1.90, or 0.2 percent, to $1,240.20 an ounce.

In other company news:

• CEC Entertainment, the parent company of the Chuck E. Cheese pizza parlor chain, rose $6.32, or 13 percent, to $54.75. CEC agreed to be bought by the private equity firm Apollo Global Management for $950 million.

• Nu Skin plunged $30.43, or 26 percent, to $84.80. Chinese officials accused Nu Skin of operating a pyramid scheme. Nu Skin, based in Provo, Utah, sells skin care and nutritional products through a direct-selling model.

Share this page
Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.