New | Wall Street down on weak earnings, Apple weighs on US futures
Weak earnings dragged stocks lower on Tuesday and Apple’s results weighed US futures further, while a slip in the dollar helped oil and gold cap a string of losing sessions.
Stocks on Wall Street fell, with results from bellwethers IBM and United Technologies weighing the most on the S&P 500, while Apple slumped 7 per cent late after posting earnings. US equity futures extended losses, pointing to a weaker open on Wednesday.
"For the first time in a while fundamentals seem to be driving the action today in an otherwise very quiet macro backdrop and probably will continue to do so for the next couple of weeks as we work through the heart of earnings season," said Ryan Larson, head of US equity trading at RBC Global Asset Management in Chicago.
Spot gold prices gave up most of the day’s gains and were up marginally after hitting a five-year low on Monday. Investors have dumped gold as the dollar rises and Greece looks to seal a bailout deal.
US crude oil futures rose in choppy trading as the August contract expired, while Brent advanced but remained toward the bottom of its $55-$60 a barrel range of the past weeks, near its lowest since early April.
At Wall Street’s closing bell, the Dow Jones industrial average was down 181.12 points, or 1 per cent, at 17,919.29, the S&P 500 lost 9.07 points, or 0.43 per cent, to 2,119.21 and the Nasdaq Composite dropped 10.74 points, or 0.21 per cent, to 5,208.12.
Healthcare led Europe stocks lower after Novartis reported quarterly income below analysts’ expectations. The FTSEurofirst 300 index of top European shares closed down 1.1 per cent after rising 9.3 per cent in the previous nine sessions.
MSCI’s gauge of major global stock markets slipped 0.2 per cent.
The euro bounced back against the dollar after hitting a three-month low on Monday. It ended the New York session up 1.1 per cent at $1.0936 and the dollar index, which measures the greenback against a basket of currencies, fell 0.7 per cent.
"People were caught leaning too short against euro. It’s just some position-squaring," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
Dollar strength is seen returning in the short term on expectations of interest rate differentials, as the US Federal Reserve prepares to raise rates by year-end.
"The tension is fading on the euro down there," said David Rodriguez, quantitative strategist at FXCM in New York. "The dollar is still in control."
Spot gold added 0.4 per cent on the day to near $1,101 per ounce after earlier gaining as much as 1.2 per cent. Oil prices edged up as the US dollar slipped, but were set for large monthly drops in the face of a global supply glut.
Brent crude futures were up 43 cents at US$57.08 a barrel. US crude futures rose 21 cents to $50.36.
Crude inventories rose by 2.3 million barrels in the week to July 17, compared with analysts’ expectations for a decrease of 2.3 million barrels, according to data from industry group American Petroleum Institute.
US Treasuries prices rose as the decline in stocks fuelled demand for the safe-haven.
"You’re starting to see companies that just aren’t hitting their earnings estimates, and you get this jolt down in equities and risk off and transfer of funds into the bond market," said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago.
Benchmark 10-year Treasury notes were last up 12/32 in price to yield 2.3307 per cent, from 2.374 late Monday. US 30-year bonds were last up 24/32 to yield 3.0674 per cent, from a yield of 3.106 per cent late Monday.
Watch: Apple gives weak forecast, shares drop