June 11, 2023

Earnings Throw Water on S.&P. 500’s Party

A string of lackluster earnings reports weighed on the stock market on Tuesday, ending an eight-day winning streak for the Standard Poor’s 500-stock index.

Coca-Cola, the world’s largest beverage maker, fell after the company said it sold less soda in its home market of North America and its earnings declined 4 percent. Charles Schwab, the retail brokerage firm, dropped after it reported disappointing second-quarter earnings. And Marathon Petroleum, the fuel refiner, declined after it forecast weak earnings and said its business was being hurt by renewable-fuels laws.

“The expectations out there for earnings over all, they’re pretty modest,” said Scott Wren, a senior equity strategist at Wells Fargo. “Earnings season is not going to be what drives the market from here.”

The Dow Jones industrial average fell 32.41 points, or 0.2 percent, to close at 15,451.85. The S. P. 500 declined 6.24 points, or 0.4 percent, to 1,676.26. The Nasdaq composite dropped 8.99 points, or 0.3 percent, to 3,598.50.

Eight of the 10 industry groups in the S. P. 500 fell. The declines were led by materials companies. Phone and technology companies were the two groups that gained.

Coke dropped 78 cents, or 1.9 percent, to $40.23 after the company reported that its second-quarter profit fell 4 percent. Charles Schwab fell 71 cents, or 3.3 percent, to $21 after its earnings came in short of analysts’ expectations as expenses rose and its interest margins fell. Marathon Petroleum fell $3.17, or 4.3 percent, to $69.93.

“Expectations for earnings growth this quarter are fairly subdued,” said Michael Sheldon, chief market strategist for the RDM Financial Group. “However, the important thing for investors is to look ahead to the second half of the year, where earnings are supposed to pick up significantly.”

Overall S. P. 500 earnings are expected to grow by 3.4 percent in the second quarter from the same period a year ago, according to data from SP Capital IQ. The rate of earnings growth is predicted to rise in the third and fourth quarters, reaching 11.6 percent in the final three months of the year.

The stock market has climbed back to record levels after a brief slump in June, when the S. P. 500 logged its first monthly decline since October on concerns that the Federal Reserve would ease back on its economic stimulus too quickly. The S. P. 500 rose for eight consecutive trading sessions through Monday, its longest winning streak since January. The index is up 4.4 percent in July, putting it on track to log its biggest monthly gain since January, when it rose 5 percent.

Stocks rose last week when Ben S. Bernanke, the Fed’s chairman, said the central bank would not ease its stimulus efforts before the economy was ready. On Wednesday, Mr. Bernanke is scheduled to give his semiannual testimony to Congress on the economy.

Esther L. George, president of the Federal Reserve Bank of Kansas City and a voting member of the Fed’s monetary policy committee, said on Tuesday that the central bank should cut back on its stimulus as the labor market begins to recover. The central bank is currently buying $85 billion of Treasury and mortgage securities a month to keep interest rates low and to encourage borrowing and hiring.

“It is time to adjust those purchases,” Ms. George told Fox Business Network.

In government bond trading, the 10-year Treasury note rose 3/32, to 93 8/32, while its yield slipped to 2.53 percent, from 2.54 percent late Monday. The 10-year Treasury yield has retreated since surging as high as 2.74 percent on July 5.

Article source: http://www.nytimes.com/2013/07/17/business/daily-stock-market-activity.html?partner=rss&emc=rss

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