April 22 (Bloomberg) -- U.S. stocks fell for a second day after earnings reports from UnitedHealth Group Inc., Texas Instruments Inc. and Coach Inc. rekindled concern that the economic slowdown has spread beyond the financial industry.
Texas Instruments, the nation's second-largest computer-chip maker, and UnitedHealth, the biggest U.S. medical insurer, tumbled on forecasts that trailed estimates. Coach, the largest U.S. maker of luxury leather handbags, dropped after retailers discounted products. Apple Inc. fell for the first time in seven days after American Technology Research said the maker of the iPhone may not beat earnings estimates enough to boost the stock.[bn:WBTKR=SPM8:IND]
The Standard & Poor's 500 Index [] declined 12.87 points, or 0.9 percent, to 1,375.3 at 12:26 p.m. in New York, pulled to its lowest level of the day after crude oil rose to a record $119.74 a barrel. The Dow Jones Industrial Average slipped 110.41, or 0.9 percent, to 12,714.61. The Nasdaq Composite Index decreased 33.25, or 1.4 percent, to 2,374.79. About four stocks fell for every one that rose on the New York Stock Exchange.
``Earnings and earnings estimates are coming down,'' Mike Ryan, the New York-based head of wealth management research for the Americas at UBS Financial Services Inc., which oversees about $734 billion, said in an interview on Bloomberg Television. ``We're likely to see stocks continuing to be under pressure'' in the first half of 2008, he said.
The S&P 500 has dropped 6.4 percent this year as analysts reduced their projections for first-quarter profits at companies in the index every week since Jan. 4. They now predict a 13.7 percent decrease, compared with an increase of 4.7 percent at the start of the year, according to data compiled by Bloomberg. About 34 percent of S&P 500 companies that have reported first-quarter results trailed expectations, compared with 25 percent last year.
Sales Growth Slows
First-quarter sales at S&P 500 companies that have reported results so far have climbed 4.3 percent on average from a year earlier, according to data compiled by Bloomberg. While sales so far are 3.3 percent higher than analysts estimated, growth has slowed from the 7.3 percent average posted by all of the index's companies in the previous quarter.
UnitedHealth tumbled $4.12 to $33.69. First-quarter earnings missed analysts' estimates as sales to employers and individuals faltered and investment income fell. The company also forecast less full-year profit than it had previously.
WellPoint Inc., the second-largest U.S. health insurer by market value, slipped $1.91 to $46.42. Aetna Inc., the third- biggest, lost $1.72 to $40.42.
Texas Instruments
Texas Instruments predicted second-quarter profit of 42 cents to 48 cents a share, missing the 49 cents estimated by analysts, after orders for mobile-phone chips slowed. Earnings and sales for the first quarter also trailed analysts' lowered projections. The stock lost $1.91 to $28.68.
Coach declined $1.63 to $30.87. Gross margin, or earnings left after subtracting the cost of goods, narrowed as the Japanese yen gained and retailers discounted products to lure shoppers facing higher fuel and food prices.
Apple, which is scheduled to report fiscal second-quarter results tomorrow, retreated $7.79 to $160.37 after American Technology Research downgraded the shares to ``neutral'' from ``buy.''
``We believe the risk/reward at these levels is not compelling,'' analyst Shaw Wu wrote in a note to clients, saying the stock may fall 20 percent. ``While we believe Apple will report a strong quarter relative to guidance and published consensus estimates, we are concerned whether it will be good enough and whether investors will be forgiving with conservative guidance.''
CIT, CME
CIT Group Inc. lost $1.90, or 15 percent, to $10.84. The commercial lender trying to avoid a cash shortage sold $1 billion of shares of common stock for 14 percent cheaper than yesterday's closing price.
CME Group Inc. fell $52.22 to $471.28. The world's largest futures exchange reported profit excluding a tax benefit that missed analysts' estimates.
McDonald's Corp., the world's biggest restaurant company, lost 34 cents to $58.33 even after first-quarter profit rose more than analysts' estimated. U.S. comparable-store sales fell 0.8 percent last month, the first decline since March 2003, as consumers pinched by rising fuel costs and sinking home values cut spending.
Royal Bank of Scotland Group Plc's U.S.-traded shares dropped 32 cents to $7.17. The U.K.'s second-biggest lender will sell 12 billion pounds ($23.7 billion) of new shares to investors in Europe's largest rights offer to boost capital depleted by writedowns.
BJ Services
BJ Services Co. retreated $5.28 to $27.52. The world's sixth-largest oilfield-services provider reported a bigger drop in fiscal second-quarter profit than analysts estimated.
Novellus Systems Inc. declined $2.50 to $20.03. The maker of equipment that helps turn silicon wafers into computer chips reported a 71 percent drop in first-quarter profit and projected sales that missed estimates after customers curbed orders.
Crude oil for May delivery advanced as much as 1.9 percent as the dollar dropped to an all-time low against the euro, kindling interest in commodities as an inflation hedge.
Target Corp., the second-biggest U.S. discount retailer, dropped $1.23 to $53.32. Macy's Inc., the owner of its namesake chain and Bloomingdale's, lost 88 cents to $23.13. The S&P 500 Retailing Index dropped 2.2 percent.
Parker Hannifin Corp. climbed $5.39 to $82.36. The world's largest maker of hydraulic equipment said full-year profit will be higher than it forecast in January as the company expands in Europe, Asia and Latin America.
NYSE Trading
About 548.3 million shares changed hands on the NYSE, 22 percent more than at the same time yesterday. About 1.12 billion shares traded on the Big Board yesterday, the lowest level for a full session this year.
The Chicago Board Options Exchange Volatility Index, a gauge of how much investors are paying for insurance against share declines, increased 3.8 percent to 21.27. The so-called VIX has declined 34 percent from a five-year closing high on March 17. Lower readings on the index, derived from prices paid for S&P 500 options, indicate traders expect smaller share-price swings.
``If you take the volatility out of the equation, by definition you take the trading opportunities out of the equation,'' said Theodore Weisberg, president of Seaport Securities Corp. in New York. ``The worst of all worlds for brokerage firms, for traders, and to a certain degree for customers, is a market that flat lines. That seems to be the environment that we've migrated to.''
The National Association of Realtors said sales of previously owned homes fell less in March than economists forecast. Purchases dropped 2 percent to an annual rate of 4.93 million. Resales were forecast to fall 2.3 percent to a 4.92 million annual rate, according to the median projection of 72 economists in a Bloomberg News survey.
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