Published October 23, 2012
FOX Business: Capitalism Lives Here
A tepid forward guidance from several blue-chip companies ignited fresh concerns about the global economy, sending the markets tumbling in a broad-based retreat. The Dow had its worst day since June.
The Dow Jones Industrial Average slid 243 points, or 1.8%, to 13103, the S&P 500 dropped 20.7 points, or 1.4%, to 1413 and the Nadsaq Composite slumped 26.5 points, or 0.88%, to 2990.
The Dow and S&P 500 both closed at the lowest level since September, while the Nasdaq is now at its lowest level since August. Every major sector was in the red, with material, energy and financial stocks taking the heaviest selling. The yield on the U.S. 10-year Treasury bond was down 0.032-percentage point to 1.764% as traders bid up the safe-haven asset. Meanwhile the VIX, seen as Wall Street's fear gauge, surged 13%.
Other risky assets were thrashed as well. The benchmark crude oil contract traded in New York tumbled $1.98, or 2.2%, to $86.67 a barrel -- its lowest level since July. Wholesale New York Harbor gasoline slid 1.6% to $2.605 a gallon.
In metals, gold dropped $16.90, or 0.98%, to $1,709 a troy ounce.
Earnings Spook Wall Street
With earnings season in full swing, traders had no lack of corporate news to parse through. Three Dow components, plus bellwether United Parcel Service (UPS), posted results ahead of the opening bell.
DuPont (DD) posted third-quarter earnings of 44 cents a share, two cents shy of expectations. The blue-chip chemical maker's sales of $7.4 billion also trailed the Street's view of $8.15 billion. DuPont also said it expects to earn between $3.25 and $3.30 for the full year, far behind forecasts of $3.93.
3M (MMM) unveiled a third-quarter profit of $1.65 a share, matching expectations. The company’s sales of $7.5 billion came in short of the Street’s forecast of $7.6 billion. The Dow component also cut its full-year outlook to a range of $6.27 to $6.35 a share from $6.35 to $6.50 a share, partially due to an acquisition-related charge.
United Technologies (UTX) revealed adjusted quarterly earnings of $1.37 a share, better than the $1.18 a share Wall Street expected. The diversified manufacturer's revenues of $15.04 billion came in sort of estimates of $15.51 billion. The company re-affirmed its full-year profit guidance, but narrowed its sales guidance to $58 billion from a range of $58 billion to $59 billion.
United Parcel Service’s (UPS) adjusted third-quarter profit of $1.06 a share came in line with estimates. However, the package delivery company’s sales came in at $13.07 billion, missing forecasts of $13.31 billion. The company, which is seen as an economic bellwether, also updated its full-year guidance to a range of $4.55 to $4.65 a share, compared to estimates of $4.56 a share.
Also on the corporate front, technology behemoth Apple (AAPL) unveiled its iPad Mini, a smaller version of its popular iPad tablet. Shares fell as the offering with a $329 starting price caused some analysts to wonder if it will cannibalize sales of the full-size model.
Target (TGT) revealed plans to sell its credit card portfolio to TD Bank.
The economic calendar remained light on Tuesday. A report from the Richmond Federal Reserve showed the manufacturing sector in the U.S. South contracted in October after expanding the month before. The Federal Reserve's two-day monetary policy meeting was also set to kick off on the day.
Spain Worries Persist
Worries also continued swirling about Spain, the eurozone's fourth-biggest economy. The country's economy shrunk 0.4% in the third quarter, the fifth-straight quarterly contraction. Moody's also cut its rating on five regions across the country, another potentially destabilizing blow for the country that is struggling to control its borrowing costs.
The Euro Stoxx 50 sold off by 2.1% to 2478, the English FTSE 100 dropped 1.4% to 5798 and the German DAX tumbled 2.1% to 7174.
In Asia, the Japanese Nikkei 225 rose 0.04% to 9014 and the Chinese Hang Seng climbed 0.68% to 21698.