Stocks Drop on Tepid Earnings, Weak Eurozone Forecast
NEW YORK (TheStreet) -- U.S. stocks dropped on Tuesday as lackluster corporate earnings reports and a tepid outlook for European growth offset an upbeat U.S. services sector report.
With stocks at near all-time highs, investors took profits on Tuesday as attention turns to government data on jobs and economic growth scheduled for later in the week. The Commerce Department is scheduled to issue its initial estimate of third-quarter growth on Thursday, and the Labor Department is slated to release its job report on Friday.
Forecasts from the European Commission on Tuesday suggested the eurozone economy would expand by 1.1% in 2014 and are down from a 1.2% growth forecast in May, when more bullish assumptions were made on private consumption and investment.In company news, Tenet Healthcare (THC) tumbled 8.8% to $44 after the healthcare services company reported a decline in third-quarter net income to $28 million from $40 million a year ago driven partly by costs tied to its $4.3 billion purchase of Vanguard Health Systems. Expeditors International of Washington (EXPD) slumped 6.2% to close at $43.41 after the global logistics company reported third quarter earnings of 45 cents a share on revenue of $1.54 billion, missing the average analyst estimate of 49 cents a share on revenue of $1.59 billion. Delphi Automotive (DLPH) shed 3% to $55.01 after the vehicle components manufacturer cut the upper end of its 2013 adjusted earnings per share forecast to $4.35 from $4.45 and the top end of its revenue guidance range to $16.4 billion from $16.5 billion as European sales continued to decline. CF Industries (CF) lost 3.8% to $209.42 fertilizer products company reported that its third-quarter net earnings fell to $234.1 million from $403.3 million the same time last year as nitrogen sales declined to $876.3 million from $1.1 billion. The ISM non-manufacturing index for October arrived better than expected Tuesday at 55.4, above the consensus call of 54 as well as the 54.4 level reported in September, assuaging fears about the overall economic impact of the 16-day U.S. government shutdown in October. A score above 50 indicates that the non-manufacturing economy is generally expanding. "It is reassuring that despite all the uncertainty emanating from Washington D.C. during October, non-manufacturing business activity continued to advance at a pace slightly above trend," Guy Berger, an economist at RBS in Stamford, Conn., said in a note. In other economic news, U.S. chain-store sales rose 1.9% year on year for the week ended on Nov. 2, according to the International Council of Shopping Centers (ICSC) and Goldman Sachs. Comparable-store sales slipped 0.6% on a weekly basis. San Francisco Fed President John Williams will deliver a briefing at the city's Fed's Asia Economic Policy Conference at 5:10 p.m. Richmond Federal Reserve Bank President Jeffrey Lacker will speak on work force development in Charlotte, N.C., at 12:30 p.m. 10-year U.S. Treasuries were dropping 17/32, raising the yield to 2.668%. --Written by Andrea Tse and Joe Deaux in New York
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