NEW YORK: US stocks reversed course late Thursday morning as weak results from several industrial and consumer discretionary companies eclipsed gains from healthcare stocks.
The top drag on the S&P 500 and the Nasdaq was Comcast, which fell 2.7% following price target cuts from Barclays and Deutsche Bank, citing increased competition from AT&T-owned DirecTV Now.
Comcast, along with Ford, whose quarterly net income fell by more than 50 percent, were chiefly responsible for the consumer discretionary index to fall 0.77%.
Profits at S&P 500 companies have largely exceeded analysts’ estimates for the third quarter so far, setting up for the first profit growth since the second quarter of 2015.
“This is a pretty important quarter because we are expecting an inflection to put that earnings recession in the rear-view mirror and we’re going to have positive earnings growth ... Still it is not very robust,” said Michael Scanlon, managing director of Manulife Asset Management.
Overall earnings for the S&P 500 companies in the latest quarter are expected to rise 2.2%, according to Thomson Reuters I/B/E/S.
Industrials fell 0.67%, pulled down by Boeing, which rallied on Wednesday, and GE.
At 11:16am ET, the Dow Jones industrial average was down 1.98 points, or 0.01%, at 18,197.35 The S&P 500 was down 2.91 points, or 0.14%, at 2,136.52 and the Nasdaq Composite was down 13.62 points, or 0.26%, at 5,236.65.
Seven of the 11 major S&P sectors were lower, with the newly minted real estate index falling 2.52% mainly due to a 3.4% fall in Simon Property, which reported results on Wednesday.
Google parent Alphabet was down 0.7%, while online retailer Amazon.com was off 0.4%. The two companies are scheduled to report after markets close on Thursday.
“I think it’s just a bit of folks sitting on their hands as we wait for big earnings reports coming out tonight,” Scanlon said.
Gains in Bristol-Myers and Celgene, following strong results, kept the healthcare sector positive.
Investors also took Qualcomm’s deal to buy NXP Semiconductors for an enterprise value of US$47bil as a sign of confidence in the US equity market.
NXP’s shares rose 1.44%, while Qualcomm was the top stock on the S&P at 3.1% higher. Stocks of other chipmakers including Micron Tech were also higher.
Tesla rose 4.1% after the electric carmaker reported its first quarterly net profit in more than three years.
Declining issues outnumbered advancing ones on the NYSE by 1,928 to 892. On the Nasdaq, 1,483 issues fell and 1,100 advanced.
The S&P 500 index showed 13 new 52-week highs and eight new lows, while the Nasdaq recorded 53 new highs and 56 new lows. - Reuters
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