Stocks slump as earnings disappoint
New York • U.S. stocks fell in early trading Thursday as investors reacted to some disappointing earnings reports and assessed the implications of the approaching end to economic stimulus from the Federal Reserve. That stimulus has underpinned gains in the stock market for years.
KEEPING SCORE: The Standard & Poor’s 500 index dropped 16 points, or 0.8 percent, to 1,953 as of 10:13 a.m. Eastern time. The Dow Jones industrial average fell 121 points, or 0.8 percent, to 16,760. The Nasdaq composite dropped 39 points, or 0.9 percent, to 4,422.
ORGANIC MAINSTREAM: Whole Foods Market fell $1.86, or 4.8 percent, to $37.27 after reporting quarterly sales that fell shy of Wall Street expectations. The upscale grocer also lowered its sales forecast for the year. That raised worries about the intensifying competition Whole Foods is facing. The company, based in Austin, Texas, has enjoyed growth as more Americans move to eat diets they feel are wholesome. More recently, however, it products have become more mainstream.
BAD MEAT: Yum Brands slumped $4.38, or 6.4 percent, to $37.29 after he owner of the KFC and Pizza Hut restaurant chains said Thursday a food safety scandal in China that involved repacked meat has hurt sales and might be severe enough to cut into the company’s global profit. Yum said in a regulatory filing that it was too early to know when sales might rebound.
BAD BOOKS: L-3 Communications plunged $18.30, or 15.3 percent, to $101.30 after the company reported that it was investigating accounting irregularities at is Aerospace Systems unit. The company said it expects to incur a charge of $84 million and cut its earnings forecast for the second half of the year.
ASIA’S DAY: Tokyo’s Nikkei 225 closed down 0.2 percent and South Korea’s Kospi shed 0.3 percent. The Hang Seng in Hong Kong gained 0.1 percent while China’s Shanghai Composite added 0.9 percent ahead of manufacturing data due Friday. Australia’s S&P/ASX 200 edged up 0.2 percent and India’s Sensex was off 0.2 percent.
SORRY SAMSUNG: South Korean consumer electronics kingpin Samsung dove 4 percent after the company reported a bigger-than-expected fall in second quarter profit on slowing smartphone sales. Cheaper upstarts such as China’s Huawei are eroding its market share in developing nations, and Samsung was uncertain if smartphone earnings would improve this quarter. April-June quarter net profit dropped 20 percent to 6.3 trillion won ($6.1 billion).
OIL OFF THE BOIL: Benchmark U.S. crude for September delivery dropped by 85 cents, or 0.8 to $99.38 a barrel. After running up to $107 in June, it has steadily fallen back as fears of supply disruptions from Russia and the Middle East ebbed.
CURRENCIES: The euro weakened to $1.3396 from $1.3395 late Wednesday. The dollar inched up to 102.91 yen from 102.86 yen.
Johnson reported from Mumbai, India.