- S&P 500
pulls back from record high
- Caterpillar drops as guidance disappoints
- Boeing beat forecasts for eighth straight quarter
Dow Jones: -0.48%
S&P 500: -0.61%
US markets slipped on Wednesday as a raft of mixed corporate earnings gave investors an excuse to take profits following a strong run in recent sessions.
The S&P 500 was registering small losses in morning trading, pulling back after hitting another record close of 1,754.67 the night before following five consecutive days of gains. Stocks have risen sharply over the past week as hopes over a continuation of Federal Reserve monetary stimulus were sparked yesterday after a disappointing September jobs report.
According to data compiled by Bloomberg, the recent run in stock markets has pushed the average price-to-earnings multiple of the S&P 500 to 15.9, the highest since late-2009.
The bullish mood was dampened today by concerns over the Chinese economy after a report said that debt write-offs at China's biggest lenders had tripled in the first half. Meanwhile, the People's Bank of China refrained from adding liquidity to the market through new reverse repurchase operations which led to a sharp increase in the country's benchmark money market rate.
Market Analyst Craig Erlam from Alpari said it has reignited fears that the People's Bank of China could be looking to raise interest rates which could "choke off the recovery". He said: "Given that the global recovery is still fragile, with the US repeatedly shooting itself in the foot and the Eurozone constantly on the verge of another crisis, investors are very concerned about what kind of an impact this latest Chinese issue could have."
Economic data comes in mixed
US mortgage applications fell 0.6% in the week to October 18th, compared to a rise of 0.3% the previous week, according to data from the Mortgage Bankers Association.
Import prices increased by 0.2% month-on-month in September, following a 0.2% gain the month before and in line with consensus forecasts.
The house price index rose 0.3% in August, below the 1% gain the month before and under the 0.8% rise expected.
Caterpillar drops after cutting forecasts
Industrial machinery manufacturer Caterpillar was a heavy faller today after cutting its full-year guidance for revenue and profit. The company reported a 44% drop in earnings in the third quarter as weakness in the mining sector hit demand for its products.
Chipmaker Broadcom plunged despite beating analysts' forecasts with its third-quarter results, as it estimated fourth-quarter revenue that fell short of expectations.
Networking equipment maker Juniper Networks fell sharply after saying that sales in its fourth quarter will be between $1.2bn and $1.23bn, disappointing analysts who were expecting $1.23bn.
Aircraft manufacturer Boeing jumped after raising its full-year earnings forecast following a strong third quarter. The company delivered 170 commercial plans during the period, up from 149 the year before, helping it to top earnings expectation for the eighth quarter in a row.
College chain Apollo rocketed after adjusted fourth-quarter profits came in at 55 cents, well ahead of the 25 cents estimate.