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Wall Street indexes turned down amid weak corporate guidance

Wall Street indexes turned down amid the latest portion of financial reports and Donald Trump’s “State of the Union” address.

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Wall Street indexes turned down amid the latest portion of financial reports and Donald Trump’s “State of the Union” address.

The blue-chip index Dow Jones Industrial Average wiped out 21.22 points, or 0.08%, to 25,390.30 points, interrupting its three-day winning streak. The broader benchmark S&P 500 moved down by 0.22% to 2,731.63 points, ending its five-day winning streak. The technology index Nasdaq Composite reported a decline of 0.36%.

Nasdaq Composite

In a speech yesterday, Donald Trump has touched on topics such as infrastructure spending, drug prices, and trade. He has mitigated his position on financing the wall along the border with Mexico. The president repeated his view that the country needs the facility but did not declare a state of emergency as it intended earlier.

Donald Trump also pointed out that the US and China are working together to reach a trade agreement, but noted that it should include “real structural changes to curb unfair trade practices, reduce our chronic trade deficit and protect American jobs.

The United States Secretary of the Treasury Steven Mnuchin commented that talks between the two countries have so far been “very productive”.

“We are making a huge effort to reach this deadline and have a deal, which is our goal”, said Steven Mnuchin.

Investors were focused on progress in trade talks between the US and China and kept one eye on the Federal Reserve after former boss Janet Yellen said during an interview that the next move for the central bank could be a rate cute if sluggish global growth begins to hurt US economic expansion. The Fed under Chairman Jerome Powell has recently adopted a more accommodative monetary policy stance after four rate increases in 2018.

Corporate stocks performance

The shares of technology companies Facebook, Amazon, Netflix, and Alphabet fell by at least 0.5%.

General Motors registered a 1% growth in the stock price after posting better-than-expected financial results. Walt Disney and Snap also announced results that surpassed preliminary estimates with Disney shares declined by 0.1%, while Snap rose by 27%.

Meanwhile, Intel gained nearly 1%, extending a winning streak to four trading sessions.

Leading biotech stocks Regeneron Pharmaceuticals and Vertex Pharmaceuticals beat the Street’s top- and bottom-line estimates. Regeneron reversed from early gains to fall by 0.1%.

Eli Lilly and Cummins reported earnings that missed expectations. Ely Lilly dipped 0.95% while Cummins fell by 0.3%.

Corporate earnings reports

Already than 55% of the S&P 500 companies have posted their quarterly results, with 68% of them surpassing expectations.

The reporting season continues and the average earnings are above the analysts’ expectations. However, the real story is not about the earnings, but about the guidance. And this is pretty weak. Expectations for the first and second quarter of this year are near zero.

The media group New York Times Company generated more than 709 million USD in digital revenue last year, growing at a pace that suggests it will meet its stated goal of 800 million USD in digital sales by the end of 2020. The major US daily said its profit in the final three months of the year amounted to 55.1 million USD, compared with a loss of 56.8 million USD in the same period a year earlier. More than 3.3 million people pay for the company’s digital products, including its news, crossword, and food apps, a 27% jump from 2017. The total number of paid subscriptions for digital and print reached 4.3 million, a high. Online subscription revenue gained nearly 18 percent to reach 400 million USD in 2018, while digital advertising rose by 8.6%, to 259 million USD.

General Motors reported net income of 2 billion USD for the fourth quarter of 2018, as strong sales of crossovers and pickups in the US helped offset restructuring costs and losses abroad. Excluding one-time items, GM reported earnings of 1.43 USD per share, down 13% from the year-ago period but well ahead of the 1.22 USD consensus estimate. For the full year, GM reported net income of 8.1 billion USD and adjusted earnings per share of 6.54 USD.