Wall Street falls after tepid earnings and steady Fed

NEW YORK Wed Oct 24, 2012 6:11pm EDT

1 of 5. Traders work on the floor of the New York Stock Exchange October 23, 2012.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - U.S. stocks ended lower for a second day on Wednesday, as investors soured on another round of underwhelming corporate results and the Federal Reserve said it would stick to its stimulus plan until the job market improves.

The S&P 500 has lost 3.6 percent over the past five sessions, hurt by weak earnings outlooks and top-line revenue misses from large multinational companies. The index is now down 3.9 percent from its closing high of 1,465.77 set on September 14.

Boeing (BA.N) bucked the trend with a more optimistic outlook, but it could not break away from the rest of the market as it was pulled into negative territory in the afternoon. Shares of the defense and aerospace company, a Dow component, fell 0.2 percent to $72.71.

The Fed, in its latest policy statement, said it would keep buying $40 billion in mortgage-backed debt per month to keep interest rates low until the job picture gets better.

"Unemployment is staying where it is, new jobs are minimal, and the Fed is staying defensive," said Allan Flader, financial advisor at RBC Wealth Management, in Phoenix. "I would be surprised if they went to a neutral stance any time soon. You need to see more credible increases in employment, and it's just not happening yet."

On September 13, the Fed unveiled a third round of economic stimulus, or quantitative easing, known as QE3.

The Dow Jones industrial average .DJI shed 25.19 points, or 0.19 percent, to close at 13,077.34. The Standard & Poor's 500 Index .SPX dropped 4.36 points, or 0.31 percent, to 1,408.75. The Nasdaq Composite Index .IXIC slipped 8.77 points, or 0.29 percent, to end at 2,981.70.

After the close, shares of Best Buy Co (BBY.N) slid 6.9 percent to $15.75 after the No. 1 U.S. electronics chain warned that its fiscal third-quarter earnings and same-store sales would fall. Best Buy closed the regular session at $16.92, up 0.3 percent.

But shares of online game maker Zynga (ZNGA.O) jumped 12.7 percent to $2.40 after the bell after the company raised the lower end of its 2012 earnings outlook. In regular trading, Zynga fell 3.2 percent to close at $2.13.

During the regular session, Facebook Inc (FB.O) shares soared 19.1 percent to $23.23 a day after the social networking company's quarterly results showed a surprising surge in mobile advertising revenue.

Shares of Apple (AAPL.O), scheduled to report after Thursday's close, rose 0.6 percent to $616.83.

The day's other gainers included Dow Chemical Co (DOW.N), the largest U.S. chemical maker, which said late on Tuesday it would cut 5 percent of its work force and shut 20 plants to counter a slowing global economy. Its stock jumped 4.7 percent to $29.88.

On the down side, shares of movie rental company Netflix (NFLX.O) tumbled 11.9 percent to $60.12 after it cut its subscriber forecast, and shares of data-storage equipment maker EMC Corp (EMC.N) fell 0.9 percent to $24.46 after it cut its full-year outlook.

Eli Lilly and Co (LLY.N) and Bristol-Myers Squibb Co (BMY.N) posted lower-than-expected profit and their shares fell. Eli Lilly shares tumbled 2.7 percent to $50.50. Shares of Bristol-Myers slipped 0.6 percent to $33.05.

With results in from 186 of the S&P 500 companies, 59.1 percent have reported earnings above analysts' expectations, below the 62 percent long-term average, according to Thomson Reuters data.

For revenue, just 38.2 percent of companies have beaten analysts' expectations, while 61.8 percent have fallen short. In a typical quarter, 62 percent of companies beat estimates.

Homebuilders' stocks ranked among the session's best performers. An index of housing stocks .HGX shot up 0.7 percent. Shares of PulteGroup (PHM.N), one of the largest U.S. homebuilders, gained 0.8 percent to $17.45.

Sales of new U.S. single-family homes jumped 5.7 percent in September to the highest level in nearly 2-1/2 years, offering more evidence that the housing market's recovery is improving.

Volume was roughly 6.2 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of 6.51 billion.

Decliners outnumbered advancers on the NYSE by a ratio of about 16 to 13. On the Nasdaq, about 14 stocks fell for every 11 that rose.

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal)

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Comments (4)
explorer08 wrote:
Are not the stock markets simply schizophrenic and irrational in these modern times? Lunging forward, backward, up, down on a daily basis with seemingly no rhyme nor reason to the common man. Professional traders may claim to understand the markets but we might just consider that the markets are……insane.

Oct 24, 2012 8:40am EDT  --  Report as abuse
Willvp wrote:
the financial world is like an orchestra, these days, playing to the direction of the conductor.

Indeed, worldwide the stock markets, the currencies all are linked and move synchronized. Manipulation galore !

A conductor strong enough to force all countries, all banks to listen to the second of what he dictates.

Wonder where that conductor has got his office?

Oct 24, 2012 9:59am EDT  --  Report as abuse
explorer08….I agree completely. Everyday is a new crisis, a new hole we’re about to plunge into, no genuine evidence other than a few words on paper. Most of the volatility in the markets is self-induced in order, I believe, to move them one way or another for profiteering. How much money is made by these daily mini-panics they whirl about in?

Speculation is one thing, panic incited trading is another.

There is something fundamentally mentally wrong with this system.

Oct 24, 2012 10:09am EDT  --  Report as abuse
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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