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Stock Market News for October 15, 2015

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Disappointing outlook from Wal-Mart and weak domestic economic data dragged benchmarks in the red on Wednesday. Decline in Producers Price Index and an in-line retail sales report raised concerns about the health of the US economy. Moreover, dismal third quarter earnings results from JPMorgan also had a negative impact on investor sentiment. The Dow registered losses for the second-consecutive day for the first time this month as plunge in shares of Wal-Mart and Boeing offset gains in Intel's share.

For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) lost 0.9%, or 157.14 points, to close at 16,924.75. The Standard & Poor's 500 (S&P 500) declined nearly 0.5% to close at 1,994.24. The tech-laden Nasdaq Composite Index closed at 4,782.85, losing 0.3%. The fear-gauge CBOE Volatility Index (VIX) rose 2% to settle at 18.03. A total of around 6.9 billion shares were traded on Wednesday, lower than the last 20-sessions' average of 7.5 billion. Decliners outpaced advancing stocks on the NYSE. For 58% stocks that declined, 39% advanced.

On Wednesday, shares of Wal-Mart Stores Inc. ( WMT ) plunged 10% after anticipating sales in current fiscal 2016 year to remain unchanged due to unfavorable currency impact. However, the world's biggest retailer is expecting a 3% year-on-year gain in sales in this fiscal year, excluding the currency impact. Meanwhile, the company said that increase in expenses in the form of rise in wages will reduce earnings in next fiscal year by 6% to 12%. The company is also planning to repurchase $20 billion of its shares over the two-year period. Wal-Mart's decline shaved 44 points from the Dow yesterday, making it the worst performer among the Dow components. It was also the biggest loser among the S&P 500 companies.

Wal-Mart's weak outlook dragged down the Consumer Staples Select Sector SPDR (XLP) by 1.2% and it was one of the biggest losers among the S&P 500 sectors. Key stocks from the sector including The Kroger Co. ( KR ), Tyson Foods, Inc. ( TSN ), Costco Wholesale Corporation ( COST ), CVS Health Corporation ( CVS ) and Walgreens Boots Alliance, Inc. ( WBA ) dropped 3%, 2.6%, 1.6%, 1.6% and 1.3%, respectively.

Also, a 4.3% drop in shares of The Boeing Company ( BA ) had a negative impact on the blue-chip index. However, Intel Corporation's ( INTC ) shares gained 2.4% after reporting third quarter earnings including intangibles amortization and restructuring charges of 64 cents, easily beating the Zacks Consensus Estimate of 59 cents on revenues that also topped the estimate by 0.5%. Intel was the best performer among the blue-chip companies.

Meanwhile, slump in gasoline prices dragged down Producers Price Index (PPI) - an important indicator of inflation - by a seasonally adjusted rate of 0.5% in September, wider than the consensus estimate of a 0.2% decline. The labor department also reported that core PPI, which excludes food, energy and trade prices, declined 0.3%, in contrast with the consensus estimate of a 0.1% gain. On year-over-year basis, PPI declined at an unadjusted rate of 1.1% last month, witnessing drop in this section for eight-consecutive months.

Moreover, the U.S. Department of Commerce reported that retail sales increased just 0.1% in September from earlier month to $447.7 billion, in line with the consensus estimate. Excluding auto sales, retail sales witnessed a decline of 0.3% last month, wider than the consensus estimate of a 0.1% drop.

Additionally, in its Beige Book that released yesterday, the Fed said that manufacturing condition remained weak through mid-August through Oct 05. Weakness in the energy sector and strengthening dollar were cited as the main reasons behind weak manufacturing activity. Though, the Fed reported that both the economy and consumer expenditure expanded at a moderate rate, "labor markets generally tightened" in the period. It said: "Wage growth remained subdued in most Districts since the previous report."

Separately, shares of JPMorgan Chase & Co. ( JPM ) declined 2.5% after reporting third quarter adjusted earnings of $1.32 per share, missing the Zacks Consensus Estimate of $1.38 and declining 2.9% year on year. Also, managed net revenue of $23.5 billion in the quarter was down 6% from the year-ago quarter, lower than the Zacks Consensus Estimate of $23.8 billion. Weak trading activities primarily led to a decline in overall profit for JPMorgan in the third quarter. Dismal earnings results from JPMorgan weighed on financial stocks.

However, Wells Fargo & Company ( WFC ) announced third quarter earnings per share increased 2.9% from the year-ago level to $1.05, beating the Zacks Consensus Estimate by a cent. Also, total quarterly revenue rose 3.3% to $21.9 billion, higher than the Zacks Consensus Estimate of $21.5 billion. Though, Wells Fargo registered a strong performance in the third quarter, shares of the company declined 0.7% yesterday following the release.

Shares of Bank of America Corporation ( BAC ) rose 0.8% after declaring third quarter earnings of 37 cents per share, witnessed a significant improvement from net loss of 4 cents incurred in the prior-year quarter. It also came ahead of the Zacks Consensus Estimate of 34 cents. However, net revenue in the quarter declined 2% year-on-year to $20.7 billion, in line with the Zacks Consensus Estimate.

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TYSON FOODS A (TSN): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

CVS HEALTH CORP (CVS): Free Stock Analysis Report

WALGREENS BAI (WBA): Free Stock Analysis Report

BOEING CO (BA): Free Stock Analysis Report

INTEL CORP (INTC): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

WELLS FARGO-NEW (WFC): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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