Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 9, 2016. REUTERS/Brendan McDermid
NEW YORK: US stocks dropped on Wednesday as feeble quarterly reports from Walt Disney, Macy’s and Fossil reverberated across the consumer sector.
The consumer discretionary index fell 1.84%, on track for its worst day in three months, with all but six of its 88 components losing ground.
The biggest drag on the Dow, Disney dropped 4.4% after it posted a rare earnings miss.
Department store Macy’s tumbled 14 percent, while watch maker Fossil sank as much as 34% to a six-and-a-half year low after the two companies slashed their full-year forecasts.
Adding to gloom in retail stocks, Office Depot slumped 38% and Staples dropped 18.3%.
The two terminated plans to merge after a US federal judge ordered the deal temporarily halted because of concerns it would reduce competition.
Nine of the 10 major S&P sectors fell, while the energy index eked out a 0.16% gain.
“We’re getting a lot of news on US consumers today and it isn’t good news,” said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.
The S&P 500’s decline followed a rally the day before driven by Amazon.com, the online seller that has caused so much trouble for Macy’s and other traditional stores in recent years.
Investors said the swings of the past two sessions could be indicative of what is in store for the next several days as the quarterly earnings season winds down and traders begin to focus on macroeconomic data.
“We expect more volatility and choppiness,” said Eric Wiegand, senior portfolio manager at US Bank’s Private Client Reserve. “We could see decent moves in either direction but not necessarily confirming a long-term trend.”
The Dow Jones industrial average was down 1.09% to 17,733.72 points and the S&P 500 had lost 0.76% to 2,068.62.
The Nasdaq Composite dropped 0.69% to 4,776.63.
First-quarter earnings for S&P 500 companies have mostly beaten analysts’ expectations, but are estimated to have fallen 5.4% from a year ago, according to Thomson Reuters data.
Other retailers slammed on Wednesday included Kohl’s, Nordstrom and Dillard’s, all down more than 5%.
Declining issues outnumbered advancing ones on the NYSE by 1,757 to 1,181. On the Nasdaq, 1,794 issues fell and 951 advanced.
The S&P 500 index showed 38 new 52-week highs and seven new lows, while the Nasdaq recorded 49 new highs and 46 new lows. - Reuters
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