Stocks Waver as Investors Focus on Earnings

By Michael Wursthorn and Avantika Chilkoti 

The S&P 500 struggled to gain traction Thursday, as investors contended with a mixed bag of corporate profit reports that offered a murky outlook on the state of the U.S. economy.

Although the broad index bobbed around the flatline, the tepid move overshadowed bigger swings in shares of individual companies that reported quarterly earnings late Wednesday and Thursday morning. So far, the gains and losses piled up to leave the S&P 500 roughly where it was the day before.

On one end, shares of Twitter, 3M, Ford and eBay all suffered steep declines after reporting disappointing earnings, weighing on the S&P 500. On the other end, shares of PayPal Holdings, Microsoft and semiconductor company Lam Research notched solid gains after topping Wall Street's expectations.

The S&P 500 added 0.1% in recent trading, while the Nasdaq Composite rose 0.6%. The Dow Jones Industrial Average, meanwhile, continued to underperform broader benchmarks, falling 62 points, or 0.2%, to 26771 in recent trading, due to the pullback in 3M shares.

The latest earnings reports likely did little to shore up confidence in the U.S. economy. Growth is clearly weakening, as companies including Ford and 3M deal with the ongoing effects of the U.S.'s trade war against China.

A measure of business investment added to Thursday's gloomy economic picture after the Commerce Department said orders for long-lasting goods fell in September, snapping three straight months of gains.

And although most companies in the S&P 500 have topped analysts' expectations so far, the broad index remains on pace to notch a 4.1% contraction in third-quarter earnings from a year earlier, according to FactSet.

Shares of 3M fell 4.3%, dragging the Dow industrials firmly lower in early-morning trading. The industrial conglomerate posted lower quarterly sales in some of its core divisions and cut its earnings forecast for the rest of the year.

Twitter dropped 19% after the social-media company's third-quarter earnings fell short of expectations. Its fourth-quarter revenue forecast also disappointed the market.

EBay also fell, shedding 7.6%, after the online marketplace forecast its first quarterly revenue decline in four years. Ford shares dropped 6.5% after the car maker lowered its profit target for the year, sparking worries that a broad restructuring at the company isn't succeeding in driving earnings growth.

And Baxter International declined 6.9% after the health-products company said it may need to restate results for at least five years.

Some of those losses were offset by companies that reported more upbeat results.

Microsoft reported late Wednesday stronger-than-expected earnings and revenue, in part due to the company's bet on cloud computing. Shares jumped 1.8%

PayPal, meanwhile, said results for its latest quarter topped expectations, sending shares up 7.3%, putting it among the S&P 500's strongest performers.

Shares of Tesla, which isn't in the S&P 500, posted a big gain after the electric-car maker surprised investors by reporting a profit for the third quarter, allaying fears that it was prioritizing growth and production over profit. Shares climbed 16%.

Elsewhere, the Stoxx Europe 600 index rose 0.5% after the European Central Bank decided to leave interest rates unchanged and stuck with a plan to start buying bonds next month.

Other central banks also took action Thursday. Bank Indonesia cut interest rates by a further 25 basis points, sending the rupiah down 0.5% on the dollar. Meanwhile, Turkey's central bank surprised markets with a bigger-than-expected cut to its key repo rate, sending the lira down 0.4%. The Norwegian and Swedish central banks held their benchmark rates unchanged.

Write to Michael Wursthorn at [e-mail] and Avantika Chilkoti at [e-mail]

(END) Dow Jones Newswires

October 24, 2019 11:37 ET (15:37 GMT)

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