US stocks ended lower, swinging from initial gains amid mixed earnings results, as a global bonds sell-off ensued on growing expectations for a Dec rate hike.
The real estate sector was the biggest loser in the S&P 500 as rising Treasury yields sent traders dashing from the sector that is favoured for its dividends. Even a 1% jump in US oil prices to $49.64 did little to entice a mood of optimism on the bourse as markets continued to price in Fed action.
The S&P 500 market bellwether overall was down 0.3% at 2133 and led lower by O'Reilly Automotive (NASDAQ:ORLY), down 8.7% to $253.00, extending a loss started on Wednesday. The company had the worst corporate cocktail on offer – a third quarter earnings miss twinned with an announcement to buy rival Bond Auto Parts, Inc. (), a private company.
Shares in Tronc Inc (NASDAQ:TRNC) dropped 27.8% to $12.27 after reports that rival Gannett Co Inc (NYSE:GCI) has lost funding to buy the beleaguered owner of the LA Times.
Gannett, the largest US newspaper chain by circulation, has been trying to buy Tronc since April. Months of delays have raised doubts as to whether the deal would go through. Gannett shares ended down 17.1% at $8.21.
The S&P Midcap 400 closed down 0.9% at 1501 and led south by Community Health Systems (NYSE:CYH) down 49.7% to $5.05 after the stock was downgraded from Neutral to Underperform at Mizuho.
The S&P Smallcap 600 was down 1.1% at 719 and led by Carbo Ceramics (NYSE:CRR) down 26.7% to $7.17 after the company reported a GAAP net loss of $20mln, or a loss of $0.81 per share, on revenues of $20.2mln for the quarter ended September 30, 2016. Essentially all the company’s revenue was eaten up by a loss.
The negative mood on Wall Street was compounded after the closing bell mercifully rang, when online retailing giant Amazon.com (NASDAQ:AMZN) reported earnings per share that came in far below analyst estimates.
The company posted third-quarter earnings per share of 52 cents on revenue of $32.71bn. Analysts expected the online retail giant to post earnings of 78 cents a share on revenue of $32.69bn, according to a Thomson Reuters consensus estimate. Amazon shares traded as much as 5% lower after hours and was last seen down 4.3% at $783.00.
But things looked more upbeat at Google owner Alphabet Inc (NASDAQ:GOOGL). Also reporting after the bell its earnings topped analysts' estimates and revenue that beat expectations, and announced a more than $7bn stock buyback authorised this month.
The company posted third-quarter earnings per share of $9.06, adjusted, on revenue of $22.45bn. The technology titan was expected to report fiscal third-quarter earnings of $8.63 a share on revenue of $22.05bn, according to a Thomson Reuters consensus estimate.
Alphabet shares which ended 0.6% lower in the session, rose by 1.3% to $828.30 after the bell.
Early trading
US stocks turned lower on Thursday after expectations the Federal Reserve will hike rates in December intensified, sending stocks and government bonds lower and yields higher.
Adding to the market downside, even bullish house sales data and a clutch of buoyant earnings reports failed to avert a selloff in defensive sectors such as real estate and utilities.
The S&P 500 market bellwether was down 0.2% to 2134 and led by L-3 Communications Holdings (NYSE:LLL) down 8.1% to $136.60 after the firm’s third quarter earnings beat, but revenues missed.
Exxon Mobil (NYSE:XOM) announced a "significant oil discovery" off the coast of Nigeria. The Owowo -2 and Owowo-3 wells are confirming a discovery of 500mln to 1bn barrels of oil.
Exxon Mobil said the development plans are based on discussions with partners and the Nigerian government. Exxon shares jumped initially, but in the grind lower by the wider bourse were just 0.3% higher at $87.35.
Earlier, US pending home sales rose the most since the spring, outstripping forecasts and building upon strong new home sales reported the previous day.
The forward-looking indicator of US home sales rose in September rose 1.5% from August, when they declined 2.5%, the National Association of Realtors said. Economists had forecast a 1% gain.
Rating agencies Moody’s and Standard & Poor’s have warned they may cut the credit rating of US technology group Qualcomm (NASDAQ:QCOM) after it confirmed it would buy rival Dutch chip maker NXP in a deal valued at $47bn.
S&P Global put Qualcomm’s A+ rating on credit watch negative Thursday morning following confirmation of the transaction, which is expected to close in late 2017 and will be financed by tapping offshore cash balances and about $11bn in debt.
Moody’s said it expected to either lower by a notch or affirm Qualcomm’s A1 rating, barring any regulatory headwinds.
But if the news made the market wobble, it didn’t directly hit Qualcomm shares just yet, still up 3.8% at $70.82.
The S&P Midcap 400 was down 0.8% to 1502 and led by Community Health Systems (NYSE:CYH) down 42.3% to $5.79 after the stock was downgraded from Neutral to Underperform at Mizuho.
The S&P Smallcap 600 lost 0.8% to 723 and led lower by Essendant Inc (NASDAQ:ESND) down 17.2% to $15.46. The company announced its third quarter earnings on Wednesday which saw improvements and the inevitable bout of profit-taking the following session.
But there will be more edge-of-the-seat behaviour later, as Alphabet (NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN), LinkedIn (NYSE:LNKD) and Baidu (NASDAQ:BIDU) are among companies set to report earnings after the bell.
Pre-Open
US stocks were expected to open higher on Thursday, buoyed by a clutch of bullish earnings reports from Twitter, Tesla Motors and Bristol-Myers Squibb, and support from firm oil prices.
The S&P 500 market bellwether was indicated up 0.4% while the West Texas Intermediate US oil benchmark was up 0.2% at $49.28 after weakness the previous session.
Helping it on its way higher was drugmaker Bristol-Myers Squibb (NYSE:BMY) which raised its full-year earnings outlook after third-quarter results easily beat Wall Street’s expectations. The pharma was helped by soaring sales for drugs including cancer treatment Opdivo and blood-thinner Eliquis.
It reported third-quarter revenue of $4.9bn, a 21% increase from the same three-month period last year and above the $4.8bn predicted by analysts. Its net income was $1.2bn compared with expectations of $1bn, weighed down slightly by foreign currency pressures.
Bristol shares were up 5.4% at $51.97 pre-market.
Twitter Inc (NYSE:TWTR) shares jumped 4.1% to $18.00 after the micro-blogging site said its user growth climbed more than expected in the third quarter while it would cut up to 9% of its global workforce.
The California-based company said its advertising revenue growth slowed to 6% from a year ago in the third quarter reaching $545mln. It had slowed to 18% in the second quarter, from 37% in the first three months of the year as Twitter’s advertising business — which accounts for 90% of its revenue — continued to be hamstrung by the rise of online video.
The numbers come in the wake of reports on Wednesday that a shareholder has begun a lawsuit accusing Twitter CEO Jack Dorsey and other executives of concealing facts about Twitter’s slow user growth, even as they sold their personal stock holdings “for hundreds of millions of dollars in insider profits.”
The complaint, filed in California's federal court by shareholder Jim Porter, seeks to force Dorsey and others, including former CEO Dick Costolo and founder and Board member Evan Williams, to repay profits they made since February 2015.
Talking of litigation and fines, Deutsche Bank (NYSE:DB) shares were quoted 0.5% higher at $14.63 pre-market after the bank released Q3 earnings and brokers’ understanding that the legal wrangle with the US Department of Justice over a $14bn fine for 2008 misselling could take months to resolve. Read more
As well as better-than-expected results from Twitter, shares of electric-car maker Tesla Motors (NASDAQ:TSLA) are also trading higher after it posted a surprise third-quarter profit late on Wednesday.
Tesla shares were up 4.7% at $211.81 pre-market.
ConocoPhillips (NYSE:COP), the US oil and gas group, achieved its objective of covering its capital spending and dividend payments from its cash flows in the third quarter, putting the company in a stronger position than many of its peers.
It has also cut its planned capital spending and operating costs for 2016, and increased its projected production.
Earnings for the three months to September showed an underlying loss per share of 66 cents, worse than the 38 cent loss it reported for the equivalent period of 2015, but slightly better than the average analysts’ forecast of 69 cents.
Conoco shares were up 0.8% at $42.15.
On the flipside, United Parcel Service (NYSE:UPS) said changes in fuel surcharges and strength in the US dollar dragged on revenue growth in the third quarter, prompting the US package delivery company and economic bellwether to report sales that were modestly ahead of analysts’ estimates.
Consumer products giant Colgate-Palmolive (NYSE: CL), on Thursday reported disappointing sales amid continuing foreign currency headwinds in its overseas markets, although rising prices helped push it to a higher profit than analysts had predicted.
Ford (NYSE:F) reported a sharp drop in third-quarter profits in sharp contrast with its rival General Motors, which announced earlier in the week that its net income had more than doubled.
Ford’s net income of $1bn was more than 50% lower than the same period last year, due partly to the costs of a door latch recall. Having posted a record net income of $2.2bn in the same quarter last year, Ford said it is now planning to further cut production in the US to deal with softer demand.
Ford shares were down 0.3% at $11.85.
Adding another sour note to proceedings, a core measure of US business spending on big-ticket items fell by the most in seven months in September.
Capital goods orders, excluding defence and aircraft, fell 1.2% in September, after three straight months of gains. This was the biggest fall since February and compared with Wall Street expectations of a 0.1% decline.