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Earnings worries gaining steam

Wednesday, October 10, 2012 - 01:53

Oct 10 - Summary of business headlines: Wall Street suffers four day sell-off on Chevron warning; European merger break-up no big win for defense sector -analyst; Wal-Mart and Costco optimistic on U.S. consumer; Fed sees modest growth continuing. Conway G. Gittens reports.

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Wall Street falls for a fourth day in a row as investors just can't shake that nagging feeling as earnings season gets underway. The Dow lost 128 points marking its biggest two-day sell-off since June. Chevron set the tone with a late-warning the day before. The oil company said earnings will be down sharply due to a number of supply problems. Shares of the second largest U.S. oil company - down more than four percent. Not even a botched merger in the defense sector was seen as a reason to buy. Britain's BAE and German/French tie-up EADS ditched a deal, but the sector as a whole is at risk, warns Sarat Sethi of Douglas C. Lane. SOUNDBITE: SARAT SETHI, PORTFOLIO MANAGER, DOUGLAS C. LANE (ENGLISH) SAYING: "I still think the margin pressure is going to be there because there is a lot of money being made in these areas and every country is going through austerity, or cutting back expenses. So when you got defense companies making higher margins that's going to be the first place they are going to go after." Here's how shares of defense stocks fared: Honeywell, Level 3, and Rockwell all down for the day. But retail was a bright spot for the market. Warehouse retailer Costco beat profit forecasts thanks to higher membership fees. And Wal-Mart says holiday layaway sales are already tracking well above last year as sales continue to rebound in the U.S. The optimistic forecast sent shares of the world's biggest retailer to a record high. Retail is working in the economy's favor, according to the Federal Reserve's latest summary. The Fed's Beige Book suggests consumer spending is holding up around the country, even though hiring remains lackluster and the economy expands slowly. Finishing up in Europe, stocks there extended a three-day sell-off with minor losses. Conway Gittens, Reuters

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Earnings worries gaining steam

Wednesday, October 10, 2012 - 01:53