US stocks closed lower in a broad fall on Tuesday, led by dividend-paying sectors, as traders eyed a safer haven-inspired drop in Treasury bond yields as well as headlines on the looming presidential election a week away.
The sell-off in stocks came as polls showed a narrowing gap between US presidential candidates Hillary Clinton and Donald Trump. Rising uncertainty overshadowed a string of positive economic data, such as an improvement in the US manufacturing sector.
The S&P 500 ended down 0.7% at 2111 - marking a six-day losing streak for the first time since August 2015 - and led by Yum! Brands (NYSE:YUM) and Alcoa (NYSE:AA), both of whom spun off units this session. Yum ended down 30% at 60.69 while Alcoa shed 19.9% to $23.00.
The world’s biggest copper miner Freeport-McMoRan Inc. (NYSE:FCX) came off 0.3% to $11.12 after the chairman of Gecamines, the state-owned mining company in the Democratic Republic of Congo, told the FT he is determined to hold the line in its dispute with Freeport McMoRan over the planned sale of a stake in the country’s biggest copper project.
Meanwhile, the biggest riser on the S&P 500 market bellwether was Archer Daniels Midland Company (NYSE:ADM), up 7.3% to $46.75 after the agricultural company reported earnings that easily beat analysts' forecasts.
The S&P Midcap 400 shed 1% to 1494 and led by Communications Sales & Leasing, Inc. (NASDAQ:CSAL) down 7.2% to $26.39 on no specific news.
The S&P Smallcap 600 ended down a hefty 1.4% at 712 and led by Glatfelter (NYSE:GLT), down 19% to $18.00 after reported what company chairman Dante C Parrini called “challenging conditions” in its third quarter earnings results.
After the bell, Slowing sales of Gilead Sciences’ (NASDAQ:GILD) blockbuster Hepatitis C and HIV drugs took a toll on the company’s top and bottom lines in the third quarter, but it left after-hours shares 0.2% higher at $74.23.
Meanwhile, electric car maker Tesla Motors (NASDAQ:TSLA) said its planned acquisition of SolarCity (NASDAQ:SCTY) isn’t about to leave it with a massive financial liability at the very moment it faces a sharp rise in spending to prepare for next year’s launch of its Model 3 vehicle.
In a letter the US electric car maker claimed that SolarCity’s financials “are often misrepresented,” and sought to shed a more flattering light on the company’s borrowings, liquidity position and profitability.
The sales pitch for a combined Tesla and SolarCity comes ahead of a November 17 vote by both company’s shareholders on the $2.6bn deal.
Tesla shares which ended down 3.5% managed to recover 0.3% after hours to $191.13. SolarCity shares, down 2.7% on Tuesday, also recovered by 0.9% to $19.24 after hours.
Early trading
US shares fell on Tuesday as optimism over Chinese economic data proved short-lived, while investors were cautious about this week’s Fed rate meeting, and investors weighed up depressing news from Fiat Chrysler and the Tronc takeover.
The S&P 500 index was down 0.3% at 2119 and led by Yum! Brands (NYSE:YUM), who were not scrumptious at down 28.1% to $62.06 after the owner of KFC and Taco Bell completed the spinoff of its China division, which began trading on the New York Stock Exchange as a separate company Tuesday.
The Shanghai company, Yum China Holdings Inc., will run the KFC and Pizza Hut chains in mainland China and plans to open the first Taco Bell there before the end of this year. In all, Yum China has 7,300 restaurants in China.
The second-biggest loser was Alcoa Inc (NYSE:AA), down 19.7% $23.06 after it announced that it has completed the separation from its parent company Alcoa Inc. (now named Arconic Inc.) and has begun operating as an independent, publicly-traded company listed on the New York Stock Exchange under the symbol "AA."
Gannett (NYSE:GCI), the publisher of USA Today, said it has decided “not to pursue” a deal with rival newspaper group Tronc (NASDAQ:TRNC). It had partly been expected following a week of rumours.
Gannett had in recent months made at least two offers for Tronc, which owns publications including the LA Times, that were rejected as too low. However, investors had hoped that they would manage to forge an agreement amid a growing need for newspaper companies to consolidate.
Tronc shares crashed 16.8% to $10.01, while Gannett down 1% at $7.69.
Fiat Chrysler Automobiles N.V. (NYSE:FCAU) became the second big automaker to report a decline in US sales year on year in October, reporting a 10% drop in total sales after General Motors Company (NYSE:GM) reported a better than expected 1.7% year on year fall.
FC shares were down 0.3% at $7.30.
Ahead of the result of a two-day Fed rate meeting which began on Tuesday, markets have read the latest US manufacturing sector data as fuel for a rate hike, albeit in December.
US manufacturing grew in October, building on gains from the previous month and posting at a slightly better rate than Wall Street had anticipated.
The Institute for Supply Management’s manufacturing index managed 51.9 in October, an improvement from last month’s reading of 51.5 and above analysts’ estimate of 51.7. Readings above 50 indicate expansion.
The S&P Midcap 400 was down 0.6% at 1500 and led by Community Health Systems (NYSE:CYH), down 8% at $4.87 after at least three legal firms launched reviews for a possible class action on behalf of investors.
The S&P Smallcap 600 was down 1% at 715 and led by Glatfelter (NYSE:GLT), down 19.3% at $17.93 after reporting third quarter earnings.
Pre-Open
Wall Street shares are seen starting higher today as the political wranglings continue ahead of next week's hotly contested presidential election and the Federal Reserve begins its two-day policy meet.
Indeed, it's all happening stateside as investors are also due to digest a slew of big earnings reports.
Big names before the bell
Coach (NYSE:COH), drugs giant Pfizer (NYSE: PFE) and Molson Coors (NSYE:TAP) are all expected before the bell, while also in focus, as they always are, are key car sales numbers from the likes of General Motors (NYSE:GM) and Ford (NYSE: F). These statistics will likely give an insight into how buoyant the consumer spending is.
Stocks yesterday were uninspired - the S&P500 closing around flat at 2,126, the Dow Jones down around 18 at 18,147 and the tech heavy Nasdaq easing 0.9 at 5,189.
Futures trading today shows the Dow Jones 14 points higher; the S&P 500 2,65 higher and the Nasdaq five ahead.
Fed ton raise rates?
The head of steam building in the US economy has prompted noises about a possible interest rate rise from Janet Yellen on Wednesday (tomorrow), but a week before the election, that is, according to commentators, unlikely.
More likely, the Central Bank will let the dust settle on the vote and hike rates in December rather than open itself up to calls of intervening before hand, it is reported.
Speaking of the election, the tit-for-tat and point scoring is now beginning to reach a crescendo, with Donald Trump now predicted the email scandal would be devastating to Hillary Clinton's campaign. But FBI director James Comey is increasingly under fire for bringing a fresh investigation into the e-mails on a private server.
Latest polls show the candidates are virtually neck and neck in terms of their UNpopularity.
US investors will also be watching the results in London from two of the globe's biggest oil companies Shell (LON:RDSB, NYSE:RDSB) and BP. Both firms earnings beat consensus but Shell's were way ahead - prompting a 3.5% rise in the share price.