IBM, Apple results batter stocks
The dollar rises after a surprise Chinese rate hike. Bank of America's loss widens. Johnson & Johnson, Coca-Cola and Goldman Sachs beat estimates.
By Melinda Peer, TheStreet
Updated at 12:25 p.m. ET
At 12:25 p.m. ET, the Dow Jones Industrial Average ($INDU) was down 98 points, or 0.9%, at 11,045. The S&P 500 ($INX) was falling 10 points, or 0.8%, to 1,175, and the Nasdaq ($COMPX) was down 24 points, or 1%, at 2,457.
Shares across basic materials and energy sectors were getting hit the hardest as the dollar index jumped 1.5% higher.
Investors had a lot on their plates Tuesday amid an influx of key earnings reports and news that China's central bank had hiked lending rates by 25 basis points for the first time in three years. The unexpected move came in response to Chinese concerns about inflation.
"The surprise move out of China is causing a lot of risk aversion so there's a strong rebound in the dollar. That's hitting commodities and equities," said Peter Cardillo, chief market strategist at Avalon Partners.
Despite beating analysts' top-line and bottom-line expectations late Monday, Apple and IBM were leading the market down, as investors were disappointed by Apple's iPad sales and IBM's tech services business. Apple shares were falling 1.9% to $312, while IBM's stock was off by 3% at $138.58.
Bank of America (BAC) said its loss widened to $7.3 billion, or 77 cents a share, in the third quarter. Excluding a $10.4 billion charge, the bank earned $3.1 billion, or 27 cents a share, surpassing estimates for 16 cents a share. The shares were up 0.6% to $12.41 in midday trading.
Goldman Sachs (GS) said its third-quarter earnings dropped 40% to $1.9 billion, or $2.98 a share, beating expectations for a per-share profit of $2.32, according to Thomson Reuters. Shares were gaining 3.7% to $159.38 Tuesday.
Johnson & Johnson's (JNJ) third-quarter net income rose 2.2% to $3.42 billion, or $1.23 per share, as sales declined less than 1% to $14.98 billion. Analysts had expected the health care giant to earn $1.15 a share on $15.2 billion in revenue, according to Thomson Reuters. Shares of JNJ were down 0.7% to $63.44.
State Street (STT) reported third-quarter operating earnings of $540 million, or $1.08 a share, which marked an increase of $327 million, or 66 cents a share, over a year earlier. Excluding certain items, third-quarter earnings were 86 cents a share, compared with 71 cents a share a year ago. Analysts polled by Thomson Reuters had expected earnings of 83 cents. State Street shares were falling 0.5% to $41.02.
Coal miner Massey (MEE) is considering several strategic options, including a sale, according to a Wall Street Journal report. The options could include selling to another coal miner or a private-equity firm, buying another company or remaining independent, the report said. Massey stock was climbing 6% to $37.70.
Coca-Cola's (KO) third-quarter net income increased 8.4% to $2.1 billion, or 88 cents, as revenue rose 5% to $8.43 billion. Excluding certain items, the company earned 92 cents, beating the 89-cent average estimate. Shares were up 0.5% at $60.31.
UnitedHealth (UNH) said third-quarter earnings rose 23% to $1.14 a share on sales of $23.67 billion. Analysts had projected earnings of 84 cents on sales of $23.31 billion. UNH shares were falling 2.3% to $35.41.
Bank of New York Mellon (BK) swung to a third-quarter profit but fell short of analysts' estimates. The company reported earnings from continuing operations of 51 cents a share, compared with estimates for 54 cents. Shares were down 0.5% to $26.49 Tuesday.
Shares of EMC (EMC) were rising 1.1% to $21.02 on record third-quarter sales of $4.21 billion and earnings of 30 cents a share that were in line with analysts' estimates.
Homebuilders began work on 610,000, or 0.3%, more homes in September, the Commerce Department said. Economists had expected to see 579,000 housing starts, according to consensus estimates listed on Briefing.com. The figure compares with a revised pace of 608,000 reported for August.
Applications for building permits fell 5.6% to 571,000, less than the 565,000 economists had projected. Still, the decline suggests that future homebuilding activity will decrease.
The American Petroleum Institute will issue its weekly report on crude oil inventories this afternoon. According to analysts polled by Platts, crude supplies are projected to increase by 2.1 million barrels in the week ended October 15.
The U.S. Treasury Department said it plans to sell another 1.5 billion shares of Citigroup (C) over the next few months as it continues to reduce its holdings in the bank. The government currently has a 12% stake. Citi shares were down 0.5% at $4.15.
Crude oil for November delivery was losing $2.15 at $81.65 a barrel. The stronger U.S. dollar was sending the December gold contract plunging $30.70 to $1,341.40 an ounce.
The benchmark 10-year Treasury note fell 1/32, increasing the yield to 2.516%.
The FTSE in London was slipping 0.7%, while the DAX in Frankfurt was down by 0.3%. Hong Kong's Hang Seng gained 1.3%, and Japan's Nikkei added 0.4%.
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Changing the withholding rates does not alter that amount of taxes you owe. You still pay the same amount of tax to the government. It only affects how much they withhold from your pay to use toward what you owe.
If they take out more than you owe, you get a refund. If they take out less than you owe, you have to pay.
It's amazing to me how many people don't understand this.
I get so tired of hearing the phrase: The party of no. I pose this question. Will those that throw out that acronym also throw it out to the Democrats when the Reps take over the House? And possibly the Senate?
If someone is driving down a highway at 100MPH during rush hour and wants to go faster, the passenger that is not in control keeps saying NO, this is not a good idea why are we blaming the passenger if the passenger is right?
I have to agree that, based on the actual results of Congress over the last 4 years, nothing economically positive has been legislated.
I say leave all the income tax rates the same,BUT make all personal income subject to social security and medicare taxes.We all should pay on 100% of our income,not just the middle class.That would shore up our S.Security system.And we Must make our public employees work more years for their pensions.
The upward spiraling cost of health care will continue to keep our economy in shackles unless something is done about it. And with an aging boomer population, it is only going to get worse as time goes on.
This is not doom and gloom, it's simply facts that most Americans and our politicians continue to keep their heads in the sand about (or some part of their anatomy).
Unless the root causes of rising health care costs are addressed, they will continue to spiral out of control.
Insurance is just a non-glamorous term for financing. To the degree that health insurance provides all the financing for the out of control health care costs, requiring everyone to have insurance simply just adds fuel to an already burning inferno.
The formula is <health insurance=<health care cost. And the opoiste is also true:
>health insurance=>healthcare cost.
I think that is why health care reform should have been and be addressed. The insurance and pharma inductry alone have a lot of issues driving up costs. Maybe letting the insurance companies go national to better pool thier money would be something to look at. Also looking to see if there are any efficiencies that could be gained for the pharma folks to bring new meds to market. I like the idea of a larger pool of people paying into the health insurance pool. It might change, the emergency room is free primary care physicians.
You posted a good point. Unfortunately we measure our Reps performance on a "what have you done for me lately" mentality.
When the bacon is being dolled out, if our reps don't bring some home to their districts, they're bums and aren't likely to get re-elected.
Great examples of this are Barney Frank, Ted Kennedy and John Kerry. They've brought you lots of bacon, but at the expense and untold harm of our nation.
The entire system is corrupt and inept.
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