Alcoa's third quarter loss and its forecast of a dismal global
economic situation dragged benchmarks into the red on Wednesday.
Meanwhile, Chevron forecasted a "substantially lower" third-quarter
profit, which further intensified the bearish mood. Separately, the
U.S. Federal Reserve released its "Beige Book", which noted that
the U.S. economy is advancing modestly with moderate improvement in
housing and auto sales in September.
The Dow Jones Industrial Average (DJI) lost 1.0% to close the
day at 13,344.97. The Standard & Poor 500 (S&P 500) slipped
0.6% to finish yesterday's trading session at 1,432.56. The
tech-laden Nasdaq Composite Index slipped 0.4% to end at 3,051.78.
The fear-gauge CBOE Volatility Index (VIX) declined 0.5% to settle
at 16.29. Consolidated volumes on the New York Stock Exchange,
American Stock Exchange and Nasdaq were roughly 5.9 billion shares,
significantly lower than this year's daily average of 6.53 billion
shares. Declining stocks outpaced the advancers on the NYSE; as for
60% stocks that dropped, 37% stocks moved higher.
The third-quarter earning season began with disappointing news
from Alcoa Inc. (NYSE:
). Alcoa, U.S.'s largest aluminum producing company lost 4.6% after
reporting a third-quarter loss. A slowdown in China and low demand
for aluminum affected the results. Thus, the company reflected the
flagging economic conditions, and that was definitely a
disappointment for the markets.
Also, Chevron Corporation's (NYSE:
) shares tumbled 4.2% to $112.45 after it announced that its
third-quarter profit is estimated to be "significantly lower" on a
sequential basis. Chevron's downward revision also brings to mind
the trend of other bellwethers taking the same route. Earlier,
heavyweights such as FedEx Corporation (NYSE:
), Caterpillar Inc. (NYSE:
) and Hewlett-Packard Company (NYSE:
) had issued warnings about upcoming earnings, indicating weak
demand in Europe and China. In fact, not many analysts have a
bullish view for the third quarter earnings season. According to
market experts, the earnings season might not be encouraging enough
to push the benchmarks upward and S&P 500 companies may fall
2.3% from last year; their first decline in three years.
Meanwhile, the Federal Reserve released its Beige Book
yesterday, which noted modest improvements in auto and home sales.
Consumer spending has increased marginally since the last report.
According to the report U.S. economy is growing at a modest rate.
This helped the benchmarks trim their initial losses to some
The International Monetary Fund held its meeting in Tokyo and
said immediate action should be taken to fix the European debt
crisis. The IMF also said that the European Central bank may have
to sell $4.5 trillion of their assets if policy makers fall short
of pledges. The IMF has slashed global growth rates twice since
April 2012, which is a matter of deep concern. International
Monetary Fund Managing Director Christine Lagarde said Greece
should be given more time to meet its budget targets. "It is
sometimes better, given the circumstances…to have a bit more time,"
Separately, the U.S. Census Bureau announced that wholesale
inventories data was in line with the consensus estimates.
According to the report: "Total inventories of merchant
wholesalers, except manufacturers' sales branches and offices,
after adjustment for seasonal variations but not for price changes,
were $487.5 billion at the end of August, up 0.5 percent (+/-0.4%)
from the revised July level and were up 5.3 percent (+/-1.1%) from
the August 2011 level".
Coming to the sectors, financial bellwether stocks including
JPMorgan Chase & Co. (NYSE:
), Citigroup Inc. (NYSE:
), Wells Fargo & Company (NYSE:
), Goldman Sachs Group, Inc. (NYSE:
) and PNC Financial Services (NYSE:
) gained 0.9%, 1.6%, 0.4%, 0.4% and 0.2% respectively.
The energy sector had a bad run yesterday and was a major loser.
The Energy Select Sector SPDR lost 1.8%. Stocks such as Chevron
), Exxon Mobil Corporation (NYSE:
), TOTAL S.A. (NYSE:
), Marathon Oil Corporation (NYSE:
) and ConocoPhillips (NYSE:
) lost 4.2%, 1.2%, 0.6%, 0.1% and 1.0% respectively.
ALCOA INC (AA): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis
CONOCOPHILLIPS (COP): Free Stock Analysis
CHEVRON CORP (CVX): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis
MARATHON OIL CP (MRO): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
TOTAL FINA SA (TOT): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
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