Wall St slips after tepid earnings and steady Fed

MARKETS-USA-STOCKS:Wall St slips after tepid earnings and steady Fed

new York  October 25, 2012, 2:24 IST

new York  10 25, 2012, 02:30 IST

 

U.S. stocks ended lower for a second day on Wednesday, as investors soured on another round of underwhelming corporate results and the Federal Reserve said it would stick to its stimulus plan until the job market improves.

The S&P 500 has lost 3.6 percent over the past five sessions, hurt by weak earnings outlooks and top-line revenue misses from large multinational companies. The index is now down 3.9 percent from its closing high of 1,465.77 set on September 14.

Boeing bucked the trend with a more optimistic outlook, but it could not break away from the rest of the market as it was pulled into negative territory in the afternoon. Shares of the defense and aerospace company, a Dow component, fell 0.2 percent to $72.71.

The Fed, in its latest policy statement, said it would keep buying $40 billion in mortgage-backed debt per month to keep interest rates low until the job picuture gets better.

"Unemployment is staying where it is, new jobs are minimal, and the Fed is staying defensive," said Allan Flader, financial advisor at RBC Wealth Management, in Phoenix. "I would be surprised if they went to a neutral stance any time soon. You need to see more credible increases in employment, and it's just not happening yet."

On September 13, the Fed unveiled a third round of economic stimulus, or quantitative easing, known as QE3.

The Dow Jones industrial average shed 25.19 points, or 0.19 percent, to 13,077.34 at the close. The Standard & Poor's 500 Index dropped 4.36 points, or 0.31 percent, to 1,408.75. The Nasdaq Composite Index slipped 8.77 points, or 0.29 percent, to end at 2,981.70.

Among the day's gainers, Dow Chemical Co , the largest U.S. chemical maker, said late on Tuesday it would cut 5 percent of its work force and shut 20 plants to counter a slowing global economy. Its stock jumped 4.7 percent to $29.88.

Facebook Inc shares surged 19.1 percent to $23.23 a day after the social networking company's quarterly results shows a surprising surge in mobile advertising revenue.

But shares of movie rental company Netflix tumbled 11.9 percent to $60.12 after it cut its subscriber forecast, and shares of data-storage equipment maker EMC Corp fell 0.9 percent to $24.46 after it cut its full-year outlook.

Just 38.2 percent of companies have reported revenue that beat analysts' expectations, while 61.8 percent have fallen short, according to Thomson Reuters data. In a typical quarter, 62 percent of companies beat estimates.

Homebuilders' stocks ranked among the session's best performers. An index of housing stocks <.HGX> shot up 0.7 percent. Shares of PulteGroup , one of the largest U.S. homebuilders, gained 0.8 percent to $17.45.

Sales of new U.S. single-family homes soared 5.7 percent in September to the highest level in nearly 2-1/2 years, offering more evidence that the housing market's recovery is improving.