Dow Jones down 45 at 20,909; S&P 500 off 9 at 2,391
Macy's, Dillard's and Kohl's all report decline in like-for-like sales
Whole Foods Market defies the sector trend, rising in wake of stock buy-back news
Stocks continued to trim losses in the afternoon session but not enough to propel the main indexes into positive territory.
The S&P 500 shed 5 points at 2,394 and the Dow Jones fell 24 points to 20,919.
In Canada, the S&P/TSX Composite index fell 83 points to 15,551, weighed down by soft bank and energy stocks.
On a grim day for most retailers Whole Foods Markets Inc (NASDAQ:WFM) advanced 2.2% as it announced a stock buy-back plan.
12.50pm... Nightmare on Main Street continues
Blue-chips pared early losses but the main benchmarks still remained deep in their holes.
The S&P 500 was down 9 at 2,391 while the Dow Jones was down 45 at 20.909.
On the NYSE, Snapchat owner Snap Inc (NYSE:SNAP) is comfortably the most heavily traded shares, and most of those are probably sellers dumping the stock after the massively hyped camera technology stock revealed the extent of its losses in the first quarter.
Straight Path Communications Inc (NYSEMKT:STRP) plunged 21% to US$178.04 as Verizon Communications Inc (NYSE:VZ) won the bid battle for the wireless spectrum holder.
Verizon’s all-share offer worth US$184 a share was less than the market had been hoping for but succeeded in beating out AT&T Inc (NYSE:T), which will at least receive a US$38mln termination fee from Straight Path, which had previously agreed to get into bed with AT&T.
10.10... Dow take a three-digit tumble
The bulls were on the run, with retailers getting in the neck after worrying updates from three of the big “bricks & mortar” players.
The Dow Jones average suffered a triple-digit fall, down 133 at 20,809, while the broader-based S&P 500 gave back 14 points at 2,386.
On the big board, Snapchat owner Snap Inc (NYSE:SNAP) was the worst performer after its first set of results as a public company came up way short of expectations.
The shares lost more than a fifth of their value.
The second worst performer was department store Macy’s (NYSE:M), down 12%, as its first quarter numbers revealed that like-for-like sales continues to fall off a cliff.
Sector peer Dillard’s Inc (NYSE:DDS) tumbled 9% to US$52.65 after it reported a 4% like-for-like decline in sales in the first quarter.
Earnings per share of US$2.12 were, however, comfortably higher than the US$1.97 the market had been expecting.
On the macro front, US producer prices rose 0.5% in April, confounding economists who had expected a 0.2% increase.
First time jobless claims last week fell 2,000 to a seasonally adjusted 236,000, which is the lowest level since 1988.
Market preview
The S&P 500 was tipped to say farewell to the 2,400 level at the outset while the Dow Jones was set to continue yesterday’s softer trend.
Spread betting quotes indicated the S&P 500, which eked out a gain yesterday to close at just under 2,400, will open at around 2,392.
The Dow Jones was seen starting at around 20,891, down more than 50 points on last night’s close.
Updates from retailers ahead of the bell have not helped sentiment.
Kohl’s Corporation (NYSE:KSS) was down 2.5% at US$39.30 in pre-market trading despite its first quarter earnings topping expectations.
Earnings per share of 39 cents were up from nine cents the year before and ahead of the market consensus forecast of 29 cents.
It was the like-for-like (or same store) sales comparisons that disappointed - down 2.7% on a year earlier, the market had been braced for a more modest decline of 1.2%.
Department store Macy’s Inc (NYSE:M) was hit even harder after its earnings missed the mark.
The shares were off 11.6% at US$26 after it reported adjusted earnings per share of 24 cents, which was two-thirds of the level analysts had been expecting.
Sales of US$5.3bn were down from US$5.8bn the year before and were below the consensus forecast of US$5.5bn.
The group’s wholly-owned stores saw like-for-like sales fall 5.2% from a year earlier.
The first set of results from Snap Inc (NYSE:SNAP) as a public company received a savage reaction.
Released after the bell yesterday, the Snapchat owner’s first quarter earnings missed market expectations.
The shares lost a quarter of their value in after-hours trading as the company posed a net loss of US$2.21bn, equivalent to US$2.31 a share; the market had expected a much more modest loss of 21 cents a share.
The first quarter net loss included a staggering US$2bn of stock-based compensation expenses.
Traders were a bit more forgiving this morning and the 25% share price setback had been trimmed to 21.8%.
“US PPI and unemployment claims are on the list for today, but we can expect a lot of attention to focus on Snap and the aftermath of its post-results plunge,” commented Chris Beauchamp of spread betting outfit IG.
“The figures, showing revenue of $149 million but a remarkable loss of $2.2 billion, will allow the doubters to proclaim ‘We told you so!’ from the rooftops. Still, if the story Snap is selling is user growth, then at least here they are delivering – users have risen 36% year-on-year and 5% from the last quarter,” Beauchamp noted.
“Now the hype has subsided, will some begin to see their chance to invest?” he wondered.