This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Stocks Slammed by Rocky Start to Earnings Season

NEW YORK ( TheStreet) -- The major U.S. equity averages finished sharply lower on Wednesday as the early results for third-quarter reporting season exacerbated investor worries about a slowing global economy.

Energy stocks were especially weak after oil giant Chevron (CVX) gave a gloomy financial update, and Alcoa (AA) was a significant drag as well after the company delivered a surprise quarterly profit but moderated its global aluminum demand forecast.

"Today has been pretty emblematic of what we've been seeing in the marketplace where we're dealing with two forces that are pushing against each other," said Leo Kelly, managing director at Hightower. "On one side we have really a questionable earnings period ... and Europe's still not out of the woods, Spain's pushing back on the ECB in terms of the timing of their bailout. On the other side you have QE3 and just an astounding amount of liquidity washing through the market that was already awash in liquidity."

"[W]e're definitely looking at tech, energy, materials, some of these more cyclical areas. Those are really going to tell us what is the impact of the global slowdown on the markets," said Kelly.

The Dow Jones Industrial Average fell nearly 129 points, or 0.95%, to close at 13,345, its lowest finish since Sept. 12, the day before the Federal Reserve announced a third round of quantitative easing.

Breadth was negative with losers far outpacing winners, 25 to 4, with Bank of America (BAC) finishing flat. Aside from Alcoa and Chevron, the biggest Dow decliners were Caterpillar (CAT), Cisco (CSCO), and Hewlett-Packard (HPQ).

The top gainers were Wal-Mart Stores (WMT), McDonald's (MCD) and JPMorgan Chase (JPM).

Chevron shares slumped 4.2% after the company said third-quarter earnings would be "substantially lower" than in the second quarter as oil production declined in the first two months of the quarter and it received a lower price from the sale of oil.

The oil giant said production took a hit from a fire at its refinery in Richmond, Calif., and disruptions from Hurricane Isaac.

Aluminum producer Alcoa -- the first Dow component to report each quarter -- kicked off the unofficial start of the third-quarter earnings season Tuesday with a surprise profit, helped by productivity improvements and strong sales.

At the same time the company moderated its 2012 global aluminum demand forecast to 6%, down from 7%, as a slowdown in China slightly impacted its second half outlook. The stock closed down 4.6%.

Home Depot (HD) was weak after Oppenheimer downgraded the stock on valuation concerns. Shares dropped 2%.

Wal-Mart shares got a 1.7% boost after the world's largest retailer said it's testing same-day delivery for goods purchased online, presenting a threat Amazon's (AMZN - Get Report) online business model. Amazon's stock fell 2.4%.

The S&P 500 lost nearly 9 points, or 0.62%, to settle at 1433, while the Nasdaq slumped more than 13 points, or 0.43%, to finish at 3052.

Both indices are also back at pre-QE3 levels. The S&P 500 and Nasdaq have each fallen in four straight sessions. The Nasdaq is now off 4.5% since hitting its intraday 52-week high of 3196.93 on Sept. 21.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AMZN $659.59 0.00%
HRB $20.24 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs