US Stock Indexes Sink 07/18 11:14
U.S. stocks moved lower in midday trading on Wall Street Thursday after
Netflix reported a slump in new subscribers and dragged down communications
NEW YORK (AP) -- U.S. stocks moved lower in midday trading on Wall Street
Thursday after Netflix reported a slump in new subscribers and dragged down
The streaming video service plunged after subscriber additions fell far
below Wall Street forecasts during the April-June period. The communications
sector, which also includes Disney and Facebook, had the most severe drop.
Health insurer UnitedHealth Group led health care stocks broadly lower.
Microsoft and Qualcomm offset gains from IBM to drag technology stocks
lower. The European Union fined chipmaker Qualcomm $271 million, accusing it of
Banks led financial stocks higher. BB&T rose 2.6% and SunTrust Banks rose
2.4%. Both reported earnings that easily beat analysts' estimates.
Corporate earnings are in full swing and investors have been cautiously
assessing results and company statements. Only about 13% of S&P 500 companies
have reported according to FactSet, and analysts expect profits to fall 2.4%
Several other large companies are expected to report results later Thursday,
including Microsoft and Capital One Financial. American Express and
Schlumberger will release their results on Friday.
The latest round of corporate earnings comes ahead of a highly anticipated
Federal Reserve meeting later this month. Investors expect the central bank to
cut interest rates for the first time in a decade.
KEEPING SCORE: The S&P 500 index fell 0.3% as of noon Eastern time. The Dow
Jones Industrial Average fell 111 points, or 0.4%, to 27,108. The Nasdaq
composite fell 0.5%.
ANALYST'S TAKE: Investors have so far spent the week pulling back as
corporate earnings results give them a better picture of the economy. The
market has spent much of the year gaining ground, but remains volatile amid
economic policy concerns and a lingering trade disputes.
"We've been watching the game and now we actually get to see the scorecard,"
said Brad McMillan, chief investment officer for Commonwealth Financial Network.
The results so far have reflected financial strength from banks as the
broader economy holds up with solid job growth and consumer confidence.
"The consumers are still making things happen out there and it's showing up
in the earnings to a surprising degree," he said.
CHUGGING ALONG: Union Pacific rose 4.4% after the railroad operator reported
profit growth and beat Wall Street forecasts despite hauling less freight. The
company cut expenses by 7% during the quarter as shipments fell amid ongoing
trade disputes. On Wednesday, rival CSX cut its revenue forecast as it deals
with a slowdown in shipments.
SHRINKING STREAM: Netflix dropped plunged 11.5% in heavy trading after the
streaming service suffered a dramatic slowdown in subscriber growth during the
second quarter. The slowdown could mean trouble as the company faces a new wave
of competition this year when both Walt Disney and Apple plan to launch their
own video streaming services.
LIGHTING UP: Philip Morris rose 7.9% after the cigarette maker raised its
profit forecast for the year following a solid second quarter. The maker of
Marlboro and other brands reported lower cigarette shipments during the
quarter, but saw a surge in electronic cigarette sales. Both profit and revenue
beat analysts' forecasts.
MISSING PARTS: Genuine Parts fell 4.6% after the maker of automotive parts
reported weak second quarter financial results and trimmed its profit outlook.
The company said it is experiencing weaker demand in Europe.