Friday, 12 Jul 2024

Wall Street dips as weak earnings dampen surge from midterm elections

(Reuters) – U.S. stocks edged lower on Thursday, as a clutch of weak earnings reports punctured a rally from the previous session, which was spurred by the outcome for midterm elections.

Wynn Resorts Ltd (WYNN.O), Perrigo Co (PRGO.N) and D.R. Horton Inc (DHI.N) were the biggest losers on the S&P 500, all falling after reporting disappointing quarterly results.

Qualcomm Inc (QCOM.O) dropped 7.1 percent after the chipmaker forecast sales revenue for the holiday shopping quarter below analysts’ estimates, as it took a hit from the loss of chip sales to Apple Inc (AAPL.O).

Stocks had gained more than 2 percent on Wednesday after Americans voted for a divided Congress, which was largely anticipated by investors who raised bets that it would be positive for stocks.

While it could make it harder for President Donald Trump to push through new legislations such as additional tax cuts, investors are hoping for compromise on policies such as increasing infrastructure spending.

Despite the dip in markets on Thursday, traders said investors were largely positive about the election outcome.

“The general sentiment is I should be buying into a split Congress because it probably means nothing will happen out of Washington,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

The Fed, which is set to release its rate decision at 2:00 pm ET, is expected to leave interest rates unchanged, but the statement that follows could lay the ground for a fourth rate hike in December and for the next year.

A steep selloff in October has taken the S&P 500 .SPX down about 4 percent from its record high, with investors worried that the U.S. economy could gather more steam and encourage the Federal Reserve to raise interest rates further.

However, some of those worries were put to rest by Wednesday’s election results, which reduced the odds of further corporate tax cuts by the Trump administration.

At 10:01 a.m. EDT the Dow Jones Industrial Average .DJI was up 6.80 points, or 0.03 percent, at 26,187.10, the S&P 500 .SPX was down 2.86 points, or 0.10 percent, at 2,811.03 and the Nasdaq Composite .IXIC was down 9.52 points, or 0.13 percent, at 7,561.23.

Eight of the 11 major S&P sectors were lower, with slight gains seen in the defensive utilities, real estate and consumer staples.

Wynn Resorts fell 12.3 percent after the casino operator missed third-quarter profit estimate and warned of a slowdown in the key Macau market

D.R. Horton (DHI.N) dived 9.4 percent after the largest U.S. homebuilder warned of rising home prices and higher mortgage rates weighing on demand and reported a quarterly revenue that missed estimates.

The PHLX Housing index .HGX fell 2.8 percent, as other housing stocks such as PulteGroup Inc (PHM.N) and Toll Brothers (TOL.N) fell.

Perrigo Co (PRGO.N) dropped 10.7 percent after the generic drugmaker cut full-year earnings forecast on lowered expectations from its prescription pharmaceuticals.

The top gainer on the S&P 500 was TripAdvisor Inc (TRIP.O), which jumped 17 percent after the hotel search website reported better-than-expected third-quarter profit.

Declining issues outnumbered advancers for a 1.20-to-1 ratio on the NYSE and for a 1.08-to-1 ratio on the Nasdaq.

The S&P index recorded 24 new 52-week highs and two new lows, while the Nasdaq recorded 49 new highs and 41 new lows.

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