Stocks turn lower as dollar strengthens
The Dow hits a 2010 high, then pulls back. The number of first-time unemployment claims drops more than expected. Quarterly earnings from McDonald's, Caterpillar and UPS beat estimates.
By Melinda Peer, TheStreet
Updated at 2:18 p.m. ET
Stocks were falling Thursday afternoon, reversing course after a surge of better-than-expected earnings, a decline in initial jobless claims and a modest increase in September leading indicators fueled a morning rally. By this afternoon, a stronger U.S. dollar and weaker-than-expected growth in Philadelphia area manufacturing activity in October ahd soured investors' moods.
At 2:18 p.m. ET, the Dow Jones Industrial Average ($INDU) was down 26 points, or 0.2%, to 11,082. Earlier, the blue-chip index touched 11,206, the highest level since April 26.
A new report from the Labor Department offered an encouraging sign that the economy is recovering. Initial jobless claims fell by 23,000 to 452,000 during the week ended Oct. 16. Economists had expected the number to decline by 7,000.
"Today, in particular, we have lots of earnings reports that are in excess of expectations and that are also good with respect to the forward-looking picture," said Lawrence Creatura, portfolio manager at Federated Investors.
"It's kind of interesting because the company-specific news is in conflict with some of the dollar/macro news that we've been seeing recently, but that's because companies are adaptive, responsive organisms. They can adjust to a variety of different environments and we've been in a difficult environment for a while. That's allowed management teams to adjust in order to confront headwinds," he said, pointing to headcount reductions, spending on productivity improvements, M&A activity and investments in foreign markets.
McDonald's (MCD) topped third-quarter profit expectations by 4 cents with earnings of $1.29 a share. Sales of $6.3 billion also beat estimates slightly. The stock was climbing 1.9% to $78.85.
Travelers' (TRV) third-quarter earnings climbed 7% to $1 billion, or $2.11 per share. Excluding certain items, the company earned $1.81 a share, beating the $1.51 average estimate of analysts. The shares were adding 0.6% at $54.98.
Shares of Caterpillar (CAT) were down 2.2% to $78.09 in midday trading after the construction and mining equipment maker reported better-than-expected third-quarter earnings of $1.22 a share.
AT&T's (T) third-quarter net income more than tripled to $12.3 billion, or $2.08 a share, as revenue jumped 2.8% to $31.6 billion. Excluding certain items, the company earned 55 cents, matching the average estimate of analysts surveyed by Bloomberg. AT&T shares were slumping 0.8% to $28.40.
United Parcel Service (UPS) shares were losing 0.8% at $69.08. The package delivery company said net income rose 81% to an adjusted profit of 93 cents a share, outpacing estimates for 88 cents a share.
Xerox (XRX) reported third-quarter adjusted earnings that were 1 cent more than the average estimate at 22 cents a share. The company also raised its year-end forecast to an adjusted earnings range of 92 to 93 cents a share from 88 to 92 cents a share. The shares were up 1.4% at $11.24.
Eli Lilly (LLY) topped expectations with an adjusted profit of $1.21 a share and raised its year-end earnings forecast to a range of $4.65 to $4.75 a share, excluding certain items, from its previous range of $4.50 to $4.65. Eli Lilly shares were falling 1.8% to $35.35.
PNC Financial's (PNC) third-quarter earnings doubled to $1.1 billion, or $2.07 a share, as the company benefited from proceeds from a divestiture. Adjusted earnings of $1.56 a share surpassed the $1.36 estimates. The stock was rising 2.4% to $53.99.
Amazon.com (AMZN) will report earnings after the closing bell. According to Briefing.com, analysts expect a profit of 44 cents a share. Amazon shares were up 4.4% at $165.53.
In other economic news, manufacturing activity in the mid-Atlantic region wasn’t as robust as economists anticipated. The Federal Reserve Bank of Philadelphia's manufacturing index came in at 1 for October, missing the 1.4 that Wall Street projected, according to Briefing.com.
Leading indicators rose 0.3%, as expected, in September, compared with growth of 0.1% in August, the Conference Board said.
Crude oil for December delivery was losing $1.53 cents at $81.01 a barrel. The December gold contract fell $12.70 to $1,331.50 an ounce.
The dollar was trading higher against a basket of currencies, with the dollar index up by 0.34%, and the benchmark 10-year Treasure note fell 10/32, strengthening the yield to 2.518%.
Economic growth in China slowed to 9.6% in the third quarter from 10.3% in the previous quarter.
Hong Kong's Hang Seng rose 0.4%, and Japan's Nikkei shed 0.05%. The FTSE in London gained 0.5%, and the DAX in Frankfurt was ahead by 1.3%.
"Mom, Timmy hit me on the head."
"Yeah, but Ben hit me first"
"No I didn't"
"Yes you did"
blah, blah, blah, blah
Just don't pay attention to the fact that the Fed is buying treasuries from, well, the US Treasury. And the US Treasury isn't being robbed, they are willingly selling to the Fed.
Meanwhile, all this blame and a can of Coke now costs a dollar. And a half-gallon of ice cream is $5 and you don't even get the full half-gallon anymore, it's 1.75 quarts.
Dow up 93 points, and reaching new yearly highs. which will be great for more wall street paychecks and bonuses
Does this mean that the stimulus worked......and that Helicopter Ben does not need to keep rates at insamely low levels which help banks but hurt savers?
If the Dow is reaching new yearly highs....then why the doom in gloom by the federal reserve?
Not sure what else our government do to increase the spread between the wealthy and the poor, they seem to be hitting on all 8 cylinders.
Where are these jobs???? This is playing the numbers game like many corporations do at the end of the month to make things look better than they really are.
I know several unemployed persons that are actively looking for work. There are way more people looking than there are jobs. And when their benefits run out?? Oh they are no longer counted. Is this the drop in unemployment claims we are talking about.
My job has cut benefits and reduced wages. All while prices continue to rise. I now do twice as much work for less pay. My employer posted a temporary skilled job and received 600 applications. And I don't believe any of these people were on unemployment. And I doubt anyone was giving up a permanent job for a temporary job in the middle of the day.
Where is all the changes promised by the Obama Administration. I know no one who has benefited from all the economic stimulus plans.
Yep, it's election time !!!! And you can bet I'm going to vote for change. That word can be a two edged sword. Change for 2010 and 2012.
An interesting discussion by the shills on CNBC this morning. One of the bobble heads posed the question of why would anyone invest in US Treasuries paying 2.5% for 10 years when they could buy stock in AT&T and earn a dividend equal to 6%? Even though I don't usually glean much from the bobble heads, this is still an interesting question. I'm sure there are pension funds, bond funds, etc.. that are forced by their respective charters to purchase a certain amount of treasuries. And we all know the Fed is buying treasuries, too. But why would anyone else be buying treasuries? Are lots of people/institutions still that scared of stocks? - even huge blue chips like AT&T? If the big guys are still buying bonds by choice, what do they know that the rest of us don't? There has to be a reason why intelligent people are forgoing much higher (and seemingly safe) returns from dividends and instead buying much less attractive, but safer bonds.
This would also be a backdoor way for the Fed to drive up the stock market - force treasury yields so low that the dividends look more attractive and people buy more stock.
This should be enough to make any investor nervous about what's coming down road.
And second, AT&T came in with some good numbers. But the analysts estimates seemed really odd - they predicted 31.247 billion in earnings and AT&T reported 31.6 billion. Why in the world did the analysts stretch out their guesstimate to the nearest million? When we're talking about tens of billions of dollars, trying to estimate to the nearest million seems pointless. Why not estimate to the nearest ten million or hundred million, which would be much more practical. I know that the consensus estimate is an average, but still, why not do a little rounding and save the headache?
AT&T reporting better than expected numbers, net income tripled, stock is down.
UPS reporting better than expected numbers, net income rose 81%, stock is down.
Eli Lilly reporting better than expected numbers, stock is down.
What kind of sick, twisted logic puzzle is this?
Iggy, so far I only know of one big time politician that killed a women and got off without much of an inquiry. We can go back and forth all day. Kennedy, Edwards, Nixon, Newt, Clinton......
The biggest difference is that it matters a lot more on the right. As long as the handouts keep coming, the left will shrug it off without batting an eye.
Deklen, you are so stuck on your stupid talking points and hatred you can't even figure out when someone is agreeing with you.
The difference between Bubba and the rest is that only Bubba so far has lied under oath. If he didn't he would still be able to practice law.
Refresh my memory, who again signed NAFTA?
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[BRIEFING.COM] S&P futures vs fair value: +1.50. Nasdaq futures vs fair value: +1.50. The S&P 500 futures continue to hover just above fair value.
Asian markets ended lower across the board with China's Shanghai Composite (-1.5%) and Hong Kong's Hang Seng (-1.7%) seeing notable losses. Coal and industrial names paced the decline after the National Development and Reform Commission said next year's coal consumption will be under tighter control.
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