Indexes Fall, Earnings are Disappointing
On Tuesday stocks in the US slumped after some large companies on the market announced their disappointing earnings. Some of these were Caterpillar, Microsoft, Procter & Gamble, and many others. These announcements also included some forecasts that the results in the coming months will be weaker as well.
There was also a drop in the American orders for long-lasting produce, which dragged the Dow Jones average down by 390 points in the morning. Later it rose a little higher and won back some losses. This was the largest decline in one day since January 5.
The Dow declined 1.65% or 291 points and closed at 17,387.21. Since its record high on December 26, which was 18,053.71, it is already 3.7% lower.
The index of Standard & Poor declined by 1.34% or 27.54 points down to 2,029.55, while on December 29 it was at 2,090.57. Nasdaq also dropped by 1.89% or 90.27 points, closing at 4.681.50.
These poor reports from large companies raised many concerns, whether America can increase profits as expected, when investors are hoping for the US economy to provide earnings when the overseas economic growth slows down.
Investors, who had expected earnings to come back this year, are now disappointed. This makes investors worried, whether or not strong dollar and energy impacts are always positive, which they now don’t seem to be.
Due to bad corporate-profits news, all indexes opened lowers on Tuesday. Even the report that the sales of new homes in the US had accelerated 11.6% didn’t make an impact on the market.
Nine S&P sectors fell on Tuesday, technology stocks were the ones to drop the most with Microsoft leading the way with their fall of 9.3%. Microsoft was followed by Caterpillar with a 7.2% decline.
The only stocks to rise were utility stocks.
The decline in demand for aircraft brought about a 3.4% drop in orders for durable goods. This implies that companies in the US are becoming careful and wary because of the weakness of the Asian and European economies and the increasing strength of the US dollar.