Benchmarks ended in the red on Wednesday following dismal third quarter earnings results from Macy's and a massive sell-off in energy shares. While a mammoth decline in Macy's had a negative impact on retailers, oversupply concerns dragged down oil prices , which in turn affected energy shares. Meanwhile, investors remained cautious amid mixed Chinese economic data. Separately, the bond market took the day off in honor of Veteran's Day.
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Each of the Dow Jones Industrial Average (DJI), Standard & Poor's 500 (S&P 500) and tech-laden Nasdaq Composite Index lost 0.3% to finish at 17,702.22, 2,075.00 and 5,067.02, respectively. The fear-gauge CBOE Volatility Index (VIX) jumped 5% to settle at 16.06. A total of around 6.2 billion shares were traded on Wednesday, lower than last 20-session average of 7.1 billion. Decliners outpaced advancing stocks on the NYSE. For 56% stocks that declined, 42% advanced.
Shares of Macy's, Inc. ( M ) plunged 14%, its biggest one-day loss since 2008, after reporting discouraging third quarter earnings results. In the quarter, Macy's generated net sales of $5,874 million that declined 5.2% year over year and fell short of the Zacks Consensus Estimate of $6,151 million. Comparable sales on owned plus licensed basis dipped 3.6% while on owned basis comparable sales fell 3.9%. Though adjusted earnings of 56 cents a share beat the Zacks Consensus Estimate by a couple of cents, it declined 8.2% from the year-ago quarter.
The retailer blamed subdued consumer demand and stronger dollar for this disappointing result. Given the soft top-line performance, Macy's lowered its sales outlook for fiscal 2015. The company now expects total sales for the fiscal to decline by 2.7% to 3.1%, down from its previous guidance of a 1% decrease. For fiscal 2015, management now anticipates earnings in the band of $4.20-$4.30 per share, down from the range of $4.70-$4.80 projected earlier.
Macy's was the biggest loser among the S&P 500 companies on Wednesday. Its weak earnings results also weighed on other retailers. Some of the major retailers including Urban Outfitters Inc. ( URBN ), Kohl's Corp. ( KSS ), Michael Kors Holdings Limited ( KORS ) and Nordstrom Inc. ( JWN ) declined 7.4%, 5.4%, 4.2% and 3.7%, respectively. However, a 2.1% gain in shares of Amazon.com, Inc. ( AMZN ), which helped the stock to reach an all-time intra-day high, restricted losses in this sector.
Meanwhile, a report from the American Petroleum Institute showed that crude inventories increased by 6.3 million barrels in the week ending Nov 6, which increased oversupply concerns. This development dragged down oil prices, which pushed energy stocks into negative territory. Prices of WTI crude oil and Brent crude oil slumped 3% and 3.6% to $42.93 a barrel and $45.81 per barrel, respectively.
The Energy Select Sector SPDR (XLE) slumped 2.1% following the plunge in oil prices and was the worst performer among the S&P 500 sectors. Key stocks from the sector including Marathon Oil Corporation ( MRO ), Pioneer Natural Resources Co. ( PXD ), EOG Resources, Inc. ( EOG ), Chevron Corporation ( CVX ) and Exxon Mobil Corporation ( XOM ) declined 7.9%, 4.2%, 3.8%, 1.1% and 0.9%, respectively.
However, shares of Anheuser-Busch InBev SA/NV ( BUD ) gained 2.8% after announcing that it will acquire SABMiller plc ( SBMRY ) for around $107 billion. According to the deal, the Budweiser producer will pay around $67 per share. Meanwhile, Molson Coors Brewing Company ( TAP ) will acquire SABMiller's 58%stake that it owns as a joint venture with Molson Coors Brewing, called MillerCoors, for about $12 billion. Shares of SABMiller and Molson Coors gained 1.9% and 4.4%, respectively.
Additionally, the Utilities Select Sector SPDR (XLU), which rose 0.9%, was the biggest gainer among the S&P 500 sectors. Key stocks from the sector including PPL Corporation ( PPL ), Duke Energy Corporation ( DUK ), Edison International ( EIX ), Southern Company ( SO ) and CMS Energy Corp. ( CMS ) gained 2.1%, 1.3%, 1.2%, 1.3% and 1%, respectively.
Separately, official data showed that retail sales in China surged 11% year on year last month, witnessing its sharpest increase this year. However, fixed-asset investment grew at a pace of 10.2% through January to October from the year-ago period, its slowest rate of increase in 15 years. Also, industrial output in the world's second biggest economy witnessed year-over-year growth of 5.6% in October, in line with March's rate which was lowest since 2008.
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