Street not impressed by earnings reports
NEW YORK » Wall Street pulled back yesterday, with the Dow Jones industrials tumbling more than 100 points as a rush of quarterly results from bellwethers like AT&T Inc., DuPont
and McDonald's Corp.
failed to impress investors. Oil prices also reached fresh highs, raising concerns about inflation.
AT&T's earnings met Wall Street's forecast while McDonald's and DuPont reported stronger-than-expected numbers. But DuPont said a U.S. slowdown will offset growth abroad and McDonald's said an important metric of its sales showed a decline for March. All three companies are among the 30 stocks that make up the Dow.
"We've melted here, but it isn't a plunge," said Art Hogan, chief market analyst at Jefferies & Co. "We're in a day-to-day assessment of how good earnings season is, and right now there's more bad news than good news -- the parade has been less positive than we've anticipated."
Investors appeared little moved by news of continued weakness in the housing sector. Sales of existing homes fell 2 percent in March to a seasonally adjusted annual rate of 4.93 million units, while the median sales price dropped for a seventh straight month.
But oil's seemingly relentless march higher this year raises the specter of higher inflation that would lead consumers to cut back their discretionary spending. It would also make the Federal Reserve less likely to keep lowering interest rates.
Light, sweet crude for May delivery rose as high as $119.90 barrel, then slipped back to settle at $119.37, up $1.89. But it appeared inevitable crude would pass $120.
The Dow fell 104.79, or 0.82 percent, to 12,720.23.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 12.23, or 0.88 percent, to 1,375.94, and the Nasdaq composite index fell 31.10, or 1.29 percent, to 2,376.94. The Russell 2000 index of smaller companies fell 14.29, or 1.99 percent, to 703.71.
Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where consolidated volume came to 3.81 billion shares, up from 3.03 billion on Monday.
Bond prices edged up. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.68 percent from 3.72 percent late Monday. The yield moved to 3.69 percent in after-hours trading.
The dollar was mixed against other major currencies, while gold prices rose.
AT&T rose 22 cents to $37.81 after reporting that its first-quarter earnings rose 22 percent following growth in the company's wireless division and as its enterprise services business saw a reversal of an earlier decline.
DuPont said profits jumped 26 percent as the chemical company saw higher sales and benefits from the weak dollar. But the company's comments about the U.S. market appeared to weigh on the stock, which fell $2.09, or 4 percent, to $50.16.
McDonald's slipped 32 cents to $58.35 after saying its first-quarter earnings grew 24 percent. The fast food chain benefited from the weak U.S. dollar and strong global sales. However, it also said its same-stores sales, or sales at restaurants open at least a year, declined in March.
The rising price of oil again sent energy stocks higher. Exxon Mobil Corp. rose 13 cents to $94.39, while Chevron Corp. rose $1.33 to $94.03.