Wall St. slips as IBM disappoints; Fed minutes awaited

Traders work on the floor of the NYSE in New York
Traders work on the floor of the NYSE in New York  

By Medha Singh

(Reuters) - U.S. stocks fell on Wednesday, a day after Wall Street's strongest rally in seven months, as investors were disappointed with IBM's results and remained cautious ahead of the minutes of Federal Reserve's latest meeting.

Shares of IBM dropped 6.3 percent after the company's quarterly revenue fell more than expected, pointing to a bumpy recovery for the member of the Dow Jones Industrial Average.

Technology stocks led declines among the seven of 11 major S&P sectors that were lower.

IBM's results follow strong reports from other Dow members such as Goldman Sachs, UnitedHealth and Johnson & Johnson, which helped U.S. stocks jump more than 2 percent on Tuesday to claw back some losses from the recent selloff.

The selloff last week was mainly driven by worries over how corporate profit would be affected by tariffs, growing wages, rising interest rates and an increasingly hawkish Fed, which President Donald Trump called "my biggest threat".

The minutes of the Fed's September policy meeting, at which it raised rates for the third time this year, is due at 2:00 p.m. ET (1800 GMT). Since the meeting, a string of strong economic data has prompted Fed policymakers to say they expect to continue a rate-hike cycle that began in late 2015.

"The (stock) indices are pulling back after yesterday's blockbuster earnings rally that is likely to be challenged by the Fed's FOMC minutes," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

However, Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, said the content of the Fed minutes is already known.

"Every now and then there might be a comment or an anecdote which we didn't know about and the market might have made a quick reaction to it but generally it is a short-lived move."

Netflix pared earlier gains to trade 6.7 percent higher after reporting blowout subscriber addition numbers in its the latest quarter. Netflix helped the communication services index rise 0.2 percent and limited losses on the Nasdaq

At 9:57 a.m. EDT the Dow Jones Industrial Average was down 172.06 points, or 0.67 percent, at 25,626.36, the S&P 500 was down 8.19 points, or 0.29 percent, at 2,801.73 and the Nasdaq Composite was down 19.74 points, or 0.26 percent, at 7,625.75.

Shares of housing and construction material companies fell after data showed U.S. homebuilding dropped more than expected in September as construction activity in the South fell by the most in nearly three years. The PHLX housing index slid 1.79 percent.

United Airlines shares climbed 5.1 percent after a solid third-quarter profit and again raising it 2018 outlook. That also lifted American Airlines, Delta Air Lines, Southwest Airlines and JetBlue Airways between 1 percent and 2.9 percent.

The struggling semiconductor sector got a lift after industry bellwether ASML Holding NV's bullish results and outlook eased fears of slackening demand.

ASML's U.S. shares rose 3.6 percent, while other chip gear makers such as LAM Research, Applied Material and KLA Tencor rose between 1.5 percent and 3.1 percent.

Advancing issues outnumbered decliners by a 5.16-to-1 ratio on the NYSE and a 2.44-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and six new lows, while the Nasdaq recorded six new highs and 33 new lows.

(Reporting by Medha Singh in Bengaluru; Editing by Anil D'Silva)


More Related News

Bogle's legacy: Booming index funds with perhaps too much reach

John "Jack" Bogle, the founder of index investment pioneer Vanguard Group Inc, changed Wall Street by convincing millions to turn away from mutual funds that actively pick stocks, but his legacy will also be shaped by the unintended consequences of index funds. Bogle, who died of cancer at age 89 on Wednesday, saved investors billions of dollars by devising and championing low-fee funds that tracked markets instead of trying to beat them. As recently as 2007, index funds and ETFs accounted for only 15 percent of long-term fund assets, according to the Investment Company Institute.

4 Cannabis Investors Share Their Predictions For Industry
4 Cannabis Investors Share Their Predictions For Industry's Future

Moses, one of the traders highlighted in Michael Lewis' "The Big Short," said he initially became interested in cannabis by looking for companies to short. The more research he did, the more bullish he became. The wellness aspect of hemp/CBD is the most exciting part of it," he said.

Wall Street shrugs off weak start to hold at one-month high
Wall Street shrugs off weak start to hold at one-month high

U.S. stock futures were under pressure for most of the session and the market even opened lower due to disappointing earnings from Morgan Stanley and renewed concerns over the progress of Sino-U.S. trade talks. Morgan Stanley tumbled 6.3 percent after reporting a lower-than-expected quarterly profit as spikes in volatility in the end of the fourth quarter hurt trading. Its results rounded off earnings for the big six Wall Street banks on a weak note, sending the S&P 500 financial index 0.62 percent lower and putting it on course to post its first loss in 10 days.

5 Things Wall Street Liked About Bank of America
5 Things Wall Street Liked About Bank of America's Earnings Report

From loan growth to efficiency, everything is going in the right direction.

Big bank rally helps US stocks finish higher; Goldman soars
Big bank rally helps US stocks finish higher; Goldman soars

NEW YORK (AP) - Banks surged Wednesday following strong results from a slew of financial companies, and U.S. stock indexes finished broadly higher. Concerns about trade tensions between the U.S. and China derailed a bigger gain.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Economy

Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.