US stocks endured a harsh sell-off on Tuesday after a combo of weak earnings, falling oil prices, raised rate hike expectations and anxiety of Britain’s Brexit plans from the European Union all made their mark.
The S&P 500 market bellwether ended down 1.2% at 2136.
Meanwhile, a closely watched measure of US stock-market volatility shot up by 18% amid concerns about corporate earnings and turbulence in the forex market.
The CBOE’s Vix index, often called Wall Street’s fear gauge, traded at its highest level since September 20.
The rise came as the broad S&P 500 index pulled back after Alcoa (NYSE:AA), the aluminium company, kicked off earnings season on a gloomy note. The second-biggest faller in the S&P 500 Alcoa shares ended down 11.4% at $27.91.
Meanwhile, Illumina Inc (NASDAQ:ILMN), a diagnostics company, collapsed by a quarter and pulled the S&P 500 healthcare sector down with it. Illumina ended down 24.8% at $138.99 a day after the biomedical company announced a shortfall in quarterly revenue.
At the same time, currency markets were rattled by a 2% dive in the UK pound against the US dollar as a combination of renewed Brexit fears and a Federal Reserve hawk talking up US interest rates sent the currency pair in opposite directions.
The S&P Midcap 400 ended down 1.6% at 1521 and led by Aaron's Inc (NYSE:AAN) while the S&P Smallcap 600 finished down 1.6% at 744 and led by Rent-A-Center Inc (NASDAQ:RCII) down 28.7% to $9.18.
Chicago Fed president Charles Evans may not be a voting member of the Fed this year, but he did indicate in an overnight speech in Australia that US interest rates stability may be about to come to an end. That sent expectations of a December rate hike racing.
Oil had a bad run after more oversupply data, including from OPEC members. The US oil barometer the West Texas Intermediate was down 1.1% to $50.81.
Early trading
US shares opened lower on Tuesday, after Aloca (NYSE:AA) results disappointed, oil prices sagged on fresh supply, and a central bank hawk talked up rates.
Through the malaise, Apple Inc (NASDAQ:AAPL) shares gained – up 1.2% to $117.39 at the expense of Korean rival Samsung’s Note 7 debacle which led the phone to kill off the fry-phone. Read more.
The S&P 500 market bellwether was down 0.7% at 2148 and led by Illumina Inc (NASDAQ:ILMN) down 25.5% to $137.77 a day after the biomedical company announced estimated third quarter revenue of approximately $607mln, a 10% increase compared to $550mln in the third quarter of 2015. This unaudited estimate, based on management's preliminary financial analysis, is lower than the third quarter revenue guidance of $625mln to $630mln.
The shortfall in quarterly revenue was driven by a larger than anticipated year-over-year decline in high throughput sequencing instruments. As a result, the company expects fourth quarter revenue will be flat to slightly up
The next biggest faller was Alcoa down 10.6% to $28.17 after the aluminium maker kicked off the third quarter earnings season as it reported weaker-than-expected quarterly profits and revenues that sent its shares sliding pre-market, down 3.5% to $30.40.
The New York-based company said that its third-quarter adjusted profit, which excludes certain items, was 32 cents a share, missing Wall Street estimates by two cents.
The S&P Midcap 400 was down 1% to 1529 and led by electronics retailers Aaron’s Inc (NYSE:AAN) down 8.7% to $23.40.
The S&P Smallcap 600 was also down 1% to 749 and led by Rent-A-Center Inc (NASDAQ:RCII) down 28.9% to $9.16.
One of the largest rent-to-own operators in North America, the firm pre-released selected preliminary unaudited financial information for the quarter ended September 30.
The company estimates Core US same store sales for the three months ended September 30, to be down approximately 12%.
The Company will release its full third quarter 2016 financial results on October 26.
Meanwhile, the US dollar marked July highs after Charles Evans, the Chicago Fed president responded that the central bank holding off from any rate increases since last December, “may well be changing soon”, in a speech in Australia earlier on Tuesday.
The remarks from Evans, a non-voting member of the Fed’s policy-setting board, come as upbeat economic data have left investors feeling more confident that a rate increase could come as soon December.
Minutes from the Fed’s September meeting, one of the most divisive in recent history, are due for release on Wednesday and may shed more light on policymakers’ plans.
Taking oil prices south again on Tuesday – the West Texas Intermediate US oil barometer was down 0.8% to $50.97 - global oil supply increased in September, according to new data from the IEA.
OPEC, which is hoping to finalise a production cut at its next meeting in November, also saw its supply surge to a new record. The cartel's crude output rose by 160,000 barrels a day in September as Iraq increased production and Libya reopened ports.
Pre-Open
US shares are indicated opening lower on Tuesday after a Fed official hinted at a rate hike, oil prices headed south and Alcoa results disappointed.
The US dollar marked July highs after Charles Evans, the Chicago Fed president responded that the central bank holding off from any rate increases since last December, “may well be changing soon”, in a speech in Australia earlier on Tuesday.
The remarks from Evans, a non-voting member of the Fed’s policy-setting board, come as upbeat economic data have left investors feeling more confident that a rate increase could come as soon December.
Minutes from the Fed’s September meeting, one of the most divisive in recent history, are due for release on Wednesday and may shed more light on policymakers’ plans.
The S&P 500 market bellwether was indicated opening 0.3% lower, after a rally the previous session thanks to 14-month high oil prices following remarks of support for the OPEC Algiers deal from Russian President Vladimir Putin.
But taking oil prices south again on Tuesday – the West Texas Intermediate US oil barometer was down 0.7% to $51 - global oil supply increased in September, according to new data from the IEA.
OPEC, which is hoping to finalise a production cut at its next meeting in November, also saw its supply surge to a new record. The cartel's crude output rose by 160,000 barrels a day in September as Iraq increased production and Libya reopened ports.
Before the opening bell, kicking off the third quarter earnings season aluminium maker Alcoa (NYSE:AA) added to the downbeat mood for the bourse as it reported weaker-than-expected quarterly profits and revenues that sent its shares sliding pre-market, down 3.5% to $30.40.
The New York-based company said that its third-quarter adjusted profit, which excludes certain items, was 32 cents a share, missing Wall Street estimates by two cents.