Stocks slide on weak profits
NEW YORK — Warnings of weaker profits helped pull the stock market down on Tuesday, despite some positive economic news.
American Eagle plunged after the retailer slashed its earnings forecast in half late Monday, blaming weak sales. The company said cutting prices on clothing to lure in shoppers was hitting its profit margins. American Eagle dropped $2.87, or 14 percent, to $17.12.
Two of American Eagle’s rivals also slumped. Abercrombie & Fitch lost $2.29, or 4 percent, to $49.40. Urban Outfitters lost $1.25, or 3 percent, to $42.42.
Most companies have reported better results during the second-quarter earnings season, but sales have slowed. A growing list of companies, including eBay and Marriott, has told analysts to lower their expectations for the coming quarters. The overall picture has left investors with little reason to cheer.
“Earnings have been moving up, just not spectacularly,” said Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors. “We’d be much happier to see better revenue growth than what we’ve seen.”
Analysts expect companies in the Standard & Poor’s 500 index to post earnings growth of 4.4 percent in the second quarter. But revenue is on track to shrink 0.6 percent.
Shortly before 2 p.m., the S&P 500 index was down 10 points, or 0.6 percent, to 1,697.
The Dow Jones industrial average fell 96 points, or 0.6 percent, to 15,515. The Nasdaq composite dropped 27 points, or 0.7 percent, to 3,666.
All 10 sectors in the S&P 500 sank, led by consumer-discretionary companies, a category that includes retailers. CVS Caremark sank $1.53, or 3 percent, to $60.08 after the drugstore operator lowered its earnings target for the year.
IBM fell the most in the Dow following reports that the company would require some workers to take time off this month as hardware sales slow. Credit Suisse also cut its rating on the company. IBM dropped $4.43, or 2 percent, to $191.07.
The government reported record U.S. exports in June and new data was released showing that home prices are rising sharply.
The stock market is still trading close to record highs. The Dow has risen for six weeks straight and the S&P 500 index closed above 1,700 points for the first time last week. The S&P is up 19 percent so far this year.
The yield on the 10-year Treasury note inched up to 2.64 percent from 2.64 percent late Monday.
The dollar edged lower against the euro and the Japanese yen. Crude oil fell $1.35 to $105.22 a barrel and gold fell $19.90 to $1,282.50 an ounce.
Among other stocks making big moves:
— The Washington Post rose $25.03, or 4 percent, to $593.74 after the company announced late Monday that it would sell its namesake newspaper to Amazon founder Jeff Bezos.
— Molson Coors Brewing gained $2.66, or 5 percent, to $52.74. The company reported better earnings and revenue than analysts had expected, helped by sales in central Europe. Molson bought the Czech Republic-based brewer StarBev last year.