Stocks Slip as Investors Brace for Earnings Season
NEW YORK ( TheStreet) -- Major U.S. stock averages slipped for the second straight day on Tuesday as investors waited on the sidelines for the unofficial start of the earnings season with a report from aluminum giant Alcoa (AA) after the markets close.
The Dow Jones Industrial Average fell 55 points, or 0.41%, at 13,329. The blue-chip index posted its third day of losses in five sessions but remains up 3% since the start of the new year.
Breadth was slightly negative on the Dow, the laggards outnumbered gainers 15 to 14, while Alcoa closed unchanged. The biggest percentage blue-chip losers were AT&T (T), Verizon (V), UnitedHealth Group (UNH) and Boeing (BA).
Verizon shares were off 2.4% after CEO Lowell McAdam told The Wall Street Journal that he believes the company can feasibly buy out its wireless joint venture with Vodafone (VOD).The winners included Exxon Mobil (XOM), Hewlett-Packard (HPQ) and Home Depot (HD). Shares of Alcoa were up 1.2% in after hours trades after the aluminum products producer posted earnings of 6 cents a share on $5.9 billion in revenue and said it expected a bump up in global demand. Consensus among analysts had expected 6 cents a share on revenue of $5.61 billion. The S&P 500 was down 5 points, or 0.32%, at 1457. The Nasdaq slid 7 points, or 0.23%, at 3092. Except for health care and transportation, all sectors in the broad market were weakening, with capital goods, consumer cyclicals, conglomerates, and energy sinking the most. Apple (AAPL) shares were off 027% as investors took profits following a pop in the stock amid a DigiTimes report that said the tech giant is developing a low-cost iPhone for emerging markets for 2013. There were also reports that Apple CEO Tim Cook made his second visit to China in less than a year and met with the country's ministry of industry and information technology. Volumes reached 3.59 billion shares on the New York Stock Exchange and 1.74 billion on the Nasdaq. Advancers were marginally ahead of decliners on the Big Board, while winners beat laggards by a 1.1-to-1 ratio and the Nasdaq. Jeff Kleintop, chief market strategist for LPL Financial, said this week investors will begin to see whether fourth-quarter corporate profits suffered any collateral damage from the "fiscal cliff" battle. "When the earnings season winds down in February, the fiscal cliff battle part II may emerge as we approach the limit on U.S. borrowing authority, the end of the delay to the spending sequester, and funding of the U.S. government," said Kleintop. "Starting Tuesday afternoon, with Alcoa's Q4 earnings report, corporate fundamentals will start to matter again -- if only briefly," said Nicholas Colas, chief market strategist at ConvergEx. "U.S. companies have proven time and again over the last four years that they can deliver strong bottom-line results in spite of a tepid global economy. The market-moving information will, instead, be at the top of the income statement -- as it was during Q3 2012 season." Colas' monthly review of analysts' revenue estimates for the companies of the Dow shows an expected rebound from the third quarter's negative 2% year-on-year change to positive 1.1%. On the downside, said Colas, that's what analysts thought last quarter, right before many large multinational corporations missed on the top line. Thomson Reuters is expecting fourth-quarter earnings to grow 2.8% over the same period last year. Thomson Reuters said that of the 21 companies in the S&P 500 that have reported earnings to date for the fourth quarter 2012, 62% have reported earnings above analysts' expectations. This matches the long-term average of 62% and is lower than the average over the past four quarters of 65%. Meanwhile, 67% of companies have reported fourth-quarter revenue above analyst expectations, according to Thomson Reuters. This is higher than the long-term average of 62% and higher than the average over the past four quarters of 50%. The Federal Reserve reported that consumer credit increased by $16 billion in November versus a revised $14.1 billion in October. A consensus of analysts had expected an increase by $12.75 billion in November. Gold for February delivery closed up Tuesday by $15.90 at $1,662.20 an ounce at the Comex division of the New York Mercantile Exchange, while February crude oil contracts finished down 4 cents at $93.15 a barrel. The benchmark 10-year Treasury was up 11/32 to dilute the yield to 1.865%. The dollar was up 0.17%, according to the
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