Wall Street declines on weak earnings reports, ECB statement

By Amy Caren Daniel (Reuters) - U.S. stocks slid on Thursday after a handful of downbeat earnings pointed to a slowing global economy and as European Central Bank chief Mario Draghi's comments disappointed investors who were hoping for a more dovish stance

Reuters July 26, 2019 00:06:53 IST
Wall Street declines on weak earnings reports, ECB statement

Wall Street declines on weak earnings reports ECB statement

By Amy Caren Daniel

(Reuters) - U.S. stocks slid on Thursday after a handful of downbeat earnings pointed to a slowing global economy and as European Central Bank chief Mario Draghi's comments disappointed investors who were hoping for a more dovish stance.

Although the ECB left the door open for an interest rate cut in the future, Draghi said the risk of a recession in the euro zone was "pretty low" and that policymakers did not discuss rate cuts at the meeting.

"Risk markets have completely reversed the initial exuberance, which is likely due to the lack of details in Draghi's press conference," said Mohammed Kazmi, portfolio manager at UBP.

"We are used to Draghi delivering a dovish message, which meant that the bar was high for risk and rates markets to rally further, given pre-positioning into the meeting."

Technology stocks fell 0.7%, and led the declines among the S&P sectors as chipmakers fell following Xilinx Inc's dour forecast.

The chipmaker declined 3.3% after providing current-quarter revenue forecast below expectations, hit by the impact of U.S. restrictions on selling to Huawei Technologies Co Ltd. The Philadelphia chip index dropped 1.60% a day after hitting a record high.

Tesla Inc tumbled 14% after the electric car maker softened its language once again on meeting its profit timeline.

"Earnings have been mixed and it points to an already slow global economy and a slowing U.S. economy," said Peter Cecchini, managing director and chief market strategist at Cantor Fitzgerald in New York.

In a bright spot, 3M Co rose 1.2% after the manufacturer reiterated its full-year earnings forecast despite slowing growth in high-profile markets such as China.

Two weeks into the second-quarter earnings season, about 75% of the 185 S&P 500 companies that have reported so far have topped profit estimates, according to Refinitiv data.

Hopes that the Federal Reserve would adopt a looser monetary policy when it meets next week to counter the impact of a protracted trade war have helped Wall Street's main indexes scale record levels this month.

At 12:38 p.m. ET, the Dow Jones Industrial Average was down 163.98 points, or 0.60%, at 27,105.99, the S&P 500 was down 17.41 points, or 0.58%, at 3,002.15. The Nasdaq Composite was down 69.93 points, or 0.84%, at 8,251.57.

Ford Motor Co fell 7.5% after the automaker reported a lower-than-expected profit and gave a disappointing full-year earnings forecast.

Facebook Inc declined 1.9% as the social media giant said new rules and product changes aimed at protecting user privacy would slow its revenue growth into next year.

Other FAANG members - Google-parent Alphabet Inc and Amazon.com Inc, which fell 0.6% and 0.9% respectively, are set to report results after the bell.

Align Technology plunged 27.8% and was the biggest decliner on the S&P 500, as the orthodontic device maker's current-quarter forecast came below estimates.

Declining issues outnumbered advancers for a 2.34-to-1 ratio on the NYSE and for a 2.14-to-1 ratio on the Nasdaq.

The S&P index recorded 28 new 52-week highs and one new low, while the Nasdaq recorded 78 new highs and 58 new lows.

(Reporting by Amy Caren Daniel and Karina Dsouza in Bengaluru; Editing by Sriraj Kalluvila and Anil D'Silva)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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