U.S. stocks skid as consumer and machinery companies fall
By Marley Jay, Associated Press
Posted: 08/02/2016 08:12:35 AM PDT | Updated: 2 days ago
NEW YORK– U.S. stocks are skidding Tuesday and are on track for their biggest loss in more than a month. Consumer companies are taking big losses as investors worry about the health of the U.S economy. Machinery companies are also down, while concerns about Europe’s banks are hurting financial stocks. The price of oil continues to fall.
KEEPING SCORE: The Dow Jones industrial average fell 108 points, or 0.6 percent, to 18,296 as of 12:50 p.m. Eastern time. The Standard & Poor’s 500 index lost 17 points, or 0.8 percent, to 2,153. The Nasdaq composite slid 55 points, or 1.1 percent, to 5,129. The S&P 500 and the Nasdaq are both on pace for their largest loss since late June.
CONSUMER WOES: Auto companies reported lower U.S. sales in July as a heatwave kept buyers at home. General Motors said its sales fell 2 percent and Ford said sales fell 3 percent. Investors are worried that after setting records, U.S. auto sales may have peaked. GM stock shed $1.17, or 3.7 percent, to $30.13 and Ford lost 46 cents, or 3.6 percent, to $12.03.
CRUISING FOR A BRUISING: Cruise line operator Royal Caribbean cut its forecasts for the year as the strong dollar continues to hurt its results. That, along with a slide by consumer companies generally, left Royal Caribbean’s stock down $4.81, or 6.7 percent, to $67.05.
POWER DOWN: Industrial and transport companies struggled. Airlines fell after Delta said a revenue measurement fell in July. Delta lost $2.67, or 6.8 percent, to $36.81 and American Airlines lost $1.69, or 4.7 percent, to $33.91. Emerson Electric, which makes valves and process controls systems, posted disappointing quarterly results. It gave up $2.44, or 4.4 percent, to $53.34.
BANKS: Citigroup retreated 63 cents, or 1.5 percent, to $42.79 and Morgan Stanley fell 50 cents, or 1.8 percent, to $28. Bank stocks in Europe tumbled for the second day in a row. The losses extended to banks that were effectively given a clean bill of health by the European Banking Authority in last Friday’s stress tests.
THE QUOTE: “The market had just rallied… and now it’s sort of paused,” said Jim Paulsen, the chief investment strategist for Wells Capital Management. While the Dow and S&P 500 have set records recently, Paulsen said stocks haven’t moved very much over the last few weeks and investors are sensitive to signs of economic weakness. On Friday the Labor Department said the U.S. economy grew 1.2 percent in the second quarter, which was far less than experts forecast.
“You also had some concerns growing here since the GDP report here in the U.S. about growth,” he said.
CLEAN BILL OF HEALTH: Drugstore chain and pharmacy benefits manager CVS Health raised its 2016 forecasts as specialty drug prices kept rising and deals for Omnicare and Target’s pharmacy and clinic unit boosted its results. Its stock rose $4.65, or 5 percent, to $98.14.
PUT DOWN THE REMOTE: Discovery Communications, the company behind TLC, Animal Planet and other channels, reported profit that was larger than analysts expected as its U.S. business strengthened. Its stock gained $1.46, or 5.9 percent, to $26.23.
OIL: Oil prices have been dropping for more than two weeks and continued to fall in afternoon trading. Benchmark U.S. crude fell 61 cents, or 1.5 percent, to $39.45 in New York. Brent crude, which is used to price international oils, sank 44 cents, or 1 percent, to $41.70 a barrel London.
The price of oil climbed from about $26 a barrel in February to $51 in early June, and it’s now given up about half of its gains during that steep rise.
METALS: The price of gold rose $13.50, or 1 percent, to $1,373.10 an ounce, and silver jumped 18 cents to $20.69 an ounce. Copper added 1 cent to $2.21 a pound.
OVERSEAS: Germany’s DAX and France’s CAC 40 both lost 1.8 percent. Britain’s FTSE 100 fell 0.7 percent. Japan’s Nikkei 225 lost 1.5 percent. While the Japanese government approved a new economic stimulus package worth about $275 billion, investors were skeptical the measure will work. South Korea’s Kospi lost 0.5 percent to 2,019.70. China’s Shanghai Composite Index edged up 0.6 percent.
BONDS, CURRENCIES: Bond prices, which rose early in the day, gave up those gains in afternoon trading. The yield on the 10-year Treasury note remained at 1.52 percent. The dollar fell to 100.72 yen from 102.35 yen and the euro rose to $1.1229 from $1.1169.
With thanks and acknowledgement to the East Bay Times for this article.