U.S. Stocks Slip on Mixed Batch of Earnings

By David Hodari and Michael Wursthorn Features Dow Jones Newswires

Dow industrials, S&P 500 mostly flat after rising Monday

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-- Stocks in Hong Kong, Australia, Japan jump

-- Oil prices stall near two-year highs

Stocks stalled Tuesday amid mixed earnings results and deal chatter.

The Dow Jones Industrial Average was down 4 points, or less than 0.1%, to 23541 in recent trading. The S&P 500 declined less than 0.1%, while the Nasdaq Composite shed 0.3%.

Stocks swung on a batch of earnings reports from travel companies such as cruise-ship operator Royal Caribbean Cruises, Priceline Group and TripAdvisor. Several deals proposed on Monday continued to move shares of chip makers and media companies.

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"Put together a lot of speculative M&A transactions and earnings and you get a good cocktail to move markets," said Michael Scanlon, a portfolio manager at Manulife Asset Management.

Online travel companies Priceline Group and TripAdvisor fell 12% and 18%, respectively. Priceline lowered its profit outlook for the remainder of the year, overshadowing better-than expected sales and earnings. TripAdvisor missed revised sales estimates as it struggled with a faster-than-expected shift toward mobile.

Shares of Royal Caribbean Cruises rose 2% after the cruise-ship operator reported better-than-expected profit. While that helped lift other leisure companies, including Carnival and Norwegian Cruise Line Holdings, the broader consumer discretionary segment was weighed down by the declines among online travel companies.

Meanwhile, Broadcom shares fell about 2% as investors continued to digest the chip maker's $105 billion bid for Qualcomm, which gained more than 1%.

21st Century Fox added about 2.9% after reports that Walt Disney had held talks to purchase a large chunk of the company's entertainment business, though those talks have since cooled. Shares of Disney added 1.8% in recent trading. In 2013, media mogul Rupert Murdoch split his media empire into News Corp, owner of The Wall Street Journal and other publishing businesses, and 21st Century Fox, home to the major entertainment assets.

Robust corporate earnings have helped push stocks to fresh highs in recent weeks. More than 80% of the companies in the S&P 500 have reported results for the third quarter so far, according to FactSet, with many reporting upbeat results on revenue growth.

"People put a higher multiple on revenue-driven growth" than companies growing earnings through cost cuts, Mr. Scanlon added.

Still, not all investors believe the latest rise in equity valuations can be supported over the longer term.

"What is slightly concerning to me is that much of earnings upside has come from energy and materials, and I don't know that environment will be sustained," said Marc Zabicki, president and chief investment officer at Bower Hill Capital Management.

The Stoxx Europe 600 was little changed in afternoon trading.

Elsewhere, markets in Japan, Hong Kong, Australia and Taiwan hit multiyear highs, supported by the climb in energy and materials companies.

Japan's Nikkei rose 1.7% to levels last seen in early 1992 and Taiwan's Taiex rose 0.5% to its highest since 1990.

Hong Kong's Hang Seng's hit a 10-year high, supported by gains in Chinese oil majors and index heavyweight Tencent. Tencent spinoff China Literature goes public Wednesday.

Australia's benchmark hit its highest point since early 2008, aided by commodities, with roughly one quarter of the index composed of energy and materials companies.

The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was up 0.4% while the yield on the 10-year Treasury note inching up to 2.322%, according to Tradeweb, from 2.318% Monday. Yields move inversely to prices.

Many investors were watching for speeches Tuesday from Federal Reserve Chairwoman Janet Yellen and the Fed's new vice chairman for supervision, Randal Quarles, whose remarks could shed light on his views on banking-sector rules.

--Riva Gold contributed to this article

Write to David Hodari at David.Hodari@dowjones.com and Michael Wursthorn at Michael.Wursthorn@wsj.com

-- Major U.S. indexes fall after rallying on Monday

-- Financial and consumer-discretionary sectors lead declines

-- Stocks in Hong Kong, Australia, Japan jump

Stocks fell Tuesday because of mixed earnings results and declining bond yields.

Shares of Priceline Group and TripAdvisor posted double-digit declines to help lead the S&P 500 lower after the online travel companies disappointed investors with their quarterly results. Meanwhile, falling bond yields pressured shares of banks, and several proposed deals continued to move chip makers and media companies.

"Put together a lot of speculative M&A transactions and earnings and you get a good cocktail to move markets," said Michael Scanlon, a portfolio manager at Manulife Asset Management.

The Dow Jones Industrial Average fell 31 points, or 0.1%, to 23517 in midafternoon trading. The S&P 500 declined 0.1%, while the Nasdaq Composite fell 0.3%.

TripAdvisor shed 19% after the online travel booking company missed revised sales estimates as it struggled with users' shift toward mobile. Priceline, which lost 12% in recent trading, lowered its profit outlook for the remainder of the year, overshadowing better-than-expected sales and earnings.

Banks in the S&P 500 were trading lower, dragging down the financials sector of the broad index by 1.2%, as the yield on the 10-year Treasury note fell to 2.309%, according to Tradeweb, from 2.318% Monday. Yields fall as bond prices rise.

Declining bond yields don't bode well for banks' profits, which earn money on the difference between what they pay on deposits and what they charge to lend money.

Meanwhile, Broadcom shares fell about 2% as investors continued to digest the chip maker's $105 billion bid for Qualcomm, which gained more than 1%.

21st Century Fox added about 2.9% after reports that Walt Disney had held talks to purchase a large chunk of the company's entertainment business, though those talks have since cooled. Shares of Disney added 1.8% in recent trading. In 2013, media mogul Rupert Murdoch split his media empire into News Corp, owner of The Wall Street Journal and other publishing businesses, and 21st Century Fox, home to the major entertainment assets.

Robust corporate earnings have helped push stocks to fresh highs in recent weeks. More than 80% of the companies in the S&P 500 have reported for the third quarter so far, according to FactSet. Many have reported upbeat results, especially among the energy sector, which is rebounding from a slump in commodities prices in 2016.

However, sectors such as financials and consumer discretionary, which include travel companies, have posted earnings declines from the year before, says FactSet's data.

"What is slightly concerning to me is that much of earnings upside has come from energy and materials, and I don't know that environment will be sustained," said Marc Zabicki, president and chief investment officer at Bower Hill Capital Management.

Many investors were watching for speeches Tuesday from Federal Reserve Chairwoman Janet Yellen and the Fed's new vice chairman for supervision, Randal Quarles, whose remarks could shed light on his views on banking-sector rules.

The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was up 0.4%.

The Stoxx Europe 600 shed 0.5%. Markets in Japan, Hong Kong, Australia and Taiwan hit multiyear highs, supported by a climb in energy and materials companies.

Japan's Nikkei rose 1.7% to levels last seen in early 1992 and Taiwan's Taiex rose 0.5% to its highest since 1990.

Hong Kong's Hang Seng Index hit a 10-year high, supported by gains in Chinese oil majors and index heavyweight Tencent. Tencent spinoff China Literature goes public Wednesday.

Australia's benchmark hit its highest point since early 2008, aided by commodities, with roughly one-quarter of the index composed of energy and materials companies.

Write to David Hodari at David.Hodari@dowjones.com and Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

November 07, 2017 13:53 ET (18:53 GMT)