US Stocks Extend Losses 07/17 16:00
U.S. stocks extended their losses into a second day on Wednesday as railroad
operator CSX had its biggest drop in 11 years, pulling other industrial
companies down with it.
NEW YORK (AP) -- U.S. stocks extended their losses into a second day on
Wednesday as railroad operator CSX had its biggest drop in 11 years, pulling
other industrial companies down with it.
Banks also fell as investors worried that lower interest rates will hurt
their profits going forward. Investors expect the Federal Reserve to cut
interest rates for the first time in a decade at their next policy meeting in
The yield on the 10-year Treasury fell to 2.05% from 2.12% late Tuesday as
investors headed for less risky holdings. Utilities, which are also considered
a safer bet, made late gains and held up better than any other industry.
Abbott Laboratories gained 3.1% and pushed health care stocks higher after
the maker of infant formula and drugs raised its forecast for the year.
UnitedHealth Group also rose.
Health care was the only sector other than utilities to finish with modest
gains. Technology stocks gave up early gains and finished lower along with the
rest of the market.
The S&P 500 fell 19.62 points, or 0.7%, to 2,984.42. The Dow Jones
Industrial Average fell 115.78 points, or 0.4%, to 27,219.85. The Nasdaq
composite fell 37.59 points, or 0.5%, to 8,185.21. Small-company stocks also
fell. The Russell 2000 index lost 11.22 points, or 0.7%, to 1,550.78.
Corporate earnings reports are getting into full swing this week, and
investors have been mostly cautious in their assessments of them. Earnings are
still expected to decline for S&P 500 companies in the second quarter.
CSX plunged 10.3% after saying it now expects its revenue to decline as much
as 2% this year, after previously saying it expected growth. Investors read
that as trouble for the entire industry and sent the stocks of other railroad
operators lower. Union Pacific sank 6.1% and Norfolk Southern dropped 7.5%.
Netflix, which reported its results after the close of regular trading
Wednesday, plunged 10% in after-hours trading after reporting a dramatic
slowdown in growth during its traditionally sluggish spring season.
UnitedHealth Group, Phillip Morris and Morgan Stanley are scheduled to
release their results Thursday.
Corporate profits have so far been beating Wall Street forecasts. But
investors are keeping a close watch on the picture that companies paint for the
second half of the year.
"You're getting tempered guidance for the most part," said Lindsey Bell,
investment strategist with CFRA Research. "It's more of a reality check.
Second-half growth is not guaranteed at this point."
Investors are likely going to pause and take a more cautious approach going
forward, she said, as stock indexes reach record highs. The technology-heavy
Nasdaq is up more than 23% for the year and the broad S&P 500 is up more than
A weak home construction report loomed over companies that build homes.
Hovnanian fell 3.1%, Lennar shed 2% and Toll Brothers fell 1.9%.
U.S. home construction slipped last month as an uptick in the building of
single-family homes was offset by a big drop in apartment construction. The
figure fell short of economists' forecasts.
Nu Skin Enterprises fell 14.6% after the seller of skin care and nutritional
products slashed its profit and revenue forecast for the year. The company and
other direct sellers of wellness products are facing increased scrutiny from
the Chinese government. Nu Skin gets 33% of its revenue from China, according
Cintas rose 8.7% after the uniform rental company beat analysts' profit and
revenue forecasts for its fiscal fourth quarter. The company also gave
investors a solid profit forecast for its current fiscal year.
Benchmark crude oil fell 84 cents to settle at $56.78 a barrel. Brent crude
oil, the international standard, fell 69 cents to close at $63.66 a barrel.
Wholesale gasoline fell 1 cent to $1.88 per gallon. Heating oil declined 1 cent
to $1.89 per gallon. Natural gas fell 1 cent to $2.30 per 1,000 cubic feet.
Gold rose $12.10 to $1,421.30 per ounce, silver rose 29 cents to $15.89 per
ounce and copper rose 2 cents to $2.71 per pound.
The dollar fell to 108.10 Japanese yen from 108.34 yen on Tuesday. The euro
strengthened to $1.1223 from $1.1206.