By Mark DeCambre, MarketWatch , Andrea Riquier
A trio of Dow components report on Wednesday: Caterpillar,
Boeing and Microsoft
U.S. stock-index futures added to modest declines Wednesday
morning after a weaker-than-expected report from two Dow components
and a poor update from a semiconductor company cast a cloud over
the sector, with a fresh wave of corporate results ahead.
Wall Street is also watching developments pegged to Brexit, as a
vote for a fast-track exit for Britain from the EU was rejected by
parliament on Tuesday, but the delay eases concerns about the U.K.
crashing out of the EU without a deal on October 31.
How are major indexes faring?
Futures for the Dow Jones Industrial Average were down 126
points, or 0.5%, at 26,634, those for the S&P 500 index were
off 8.50 points, or 0.3%, at 2,986, while Nasdaq-100 futures
declined 17 points at 7,842, a fall of 0.2%.
On Tuesday
(http://www.marketwatch.com/story/stock-futures-drift-higher-as-one-of-the-busiest-weeks-for-corporate-earnings-unfolds-2019-10-22),
the Dow lost 39.54 points, or 0.15%, to 26,788.10, the S&P 500
index fell 10.73 points, or 0.36%, to 2,995.99, while the Nasdaq
Composite Index shed 58.69 points, or 0.72%, to 8,104.30.
What's driving the market?
Results from Caterpillar Inc. (CAT) and Boeing Co.(BA) knocked
the market lower in premarket action on Wednesday, with investors
already unsettled from results on Brexit and weakness among chip
companies.
Caterpillar cut its full-year 2019 earnings outlook as it
reported third-quarter results that also missed Wall Street's
consensus estimates
(http://www.marketwatch.com/story/caterpillar-cuts-profit-guidance-as-q3-sales-fall-2019-10-23).
Boeing earnings also missed estimates and deliveries of new planes
fell short, but revenues beat forecasts
(http://www.marketwatch.com/story/boeings-stock-rises-as-profit-falls-well-below-expectations-but-revenue-beats-2019-10-23).
The manufacturer said it expects the beleaguered 737 Max to return
to service in the fourth quarter.
The slide for equities also came amid a slide for the
semiconductor sector following a poor forecast from Texas
Instruments Inc. (TXN) that was much worse than expected in a
late-Tuesday earnings report, with new revenue estimate range that
fell as much as a half-billion dollars below Wall Street's
consensus revenue estimate.
See also: Texas Instruments tanks the chip sector and investors'
hopes for a rebound
(http://www.marketwatch.com/story/texas-instruments-tanks-the-chip-sector-and-investors-hopes-for-a-rebound-2019-10-22)
Overall, however, earnings from American companies have been
better than feared, albeit off lowered expectations. Thus far, of
the 98 companies that have reported third-quarter results in the
S&P 500, 82.7% have delivered results above analyst
expectations, while 12.2% reported below analyst expectations,
according to research provider Refinitiv. By comparison, 65% tend
to "beat" estimates, and 20% fall below consensus estimates,
according to Refinitiv data going back to 1994.
Meanwhile, Parliament's rejection of Prime Minister Boris
Johnson's legislative schedule for Brexit reduced the likelihood of
a departure by Oct. 31, and raised some doubts about an orderly
exit from the European trade bloc, market participants said.
The U.K. government has already asked for an extension to the
end of January 2020, and European Council President Donald Tusk
said on Twitter that he would recommend that request is
granted.
British lawmakers backed Boris Johnson's new deal on Brexit, a
big victory for the prime minister, but voted against his plan to
railroad it through Parliament in three days. That means Britain is
very unlikely to leave the European Union by October 31st as Mr
Johnson had promised it would. European leaders have signalled they
would grant an extension to that deadline.
Looking ahead, investors are watching for a report on U.S.
housing, with the Federal Housing Finance Agency's house price
index for August due at 9 a.m. Eastern Time.
Which stocks are in focus?
Caterpillar (CAT) cut its full-year 2019 earnings outlook as it
reported third-quarter results that also missed Wall Street's
consensus estimates
(http://www.marketwatch.com/story/caterpillar-cuts-profit-guidance-as-q3-sales-fall-2019-10-23).
Texas Instruments(TXN) reported earnings per
(http://www.marketwatch.com/story/hilton-worldwide-raises-profit-outlook-2019-10-23)
share of $1.40, excluding certain items, versus the $1.42 analyst
consensus and gave a forecast that was much worse than expected
late Tuesday.
(http://www.marketwatch.com/story/texas-instruments-tanks-the-chip-sector-and-investors-hopes-for-a-rebound-2019-10-22)
Nike Inc. (NKE) shares were little changed after the sports
apparel company late Tuesday reported that longtime CEO Mark Parker
was stepping down, effective January of next year. He will be
replaced by John Donahoe.
Anthem Inc. (ANTM) reported a 23% increase in third-quarter net
income
(http://www.marketwatch.com/story/anthem-tops-forecasts-on-growing-membership-premium-increases-2019-10-23)to
$1.18 billion, or $4.55 a share, as revenue rose 15% to $26.44
billion after increasing medical enrollment by 1.1 million and
increasing premiums. Adjusted for items, Anthem said it would've
earned $4.87 a share.
Shares of Facebook Inc. (FB) will be in focus as CEO Mark
Zuckerberg will testify on the social-media giant's effort to
launch controversial digital-currency platform Libra. Facebook's
stock was down 1.9% in premarket trade Wednesday.
Hilton Worldwide Holdings Inc. (HLT) revised its financial
targets for the year on Wednesday. The McLean, Va.-based company
said it now expects systemwide revenue per available room, or
RevPAR, to increase about 1% on a currency neutral basis compared
with 2018. The company had previously forecast an increase between
1% and 2%. Shares were edging 0.6% lower before the bell on
Wednesday.
Waste Management Inc. (WM)said Wednesday
(http://www.marketwatch.com/story/waste-management-profit-tops-estimates-but-sales-miss-as-recycled-commodity-values-slide-2019-10-23)
it had net income of $495 million, or $1.16 a share, in the third
quarter, down from $499 million, or $1.16 a share, in the
year-earlier period. Shares of the company fell 1.6% in the
premarket.
Chipotle Mexican Grill Inc. shares (CMG)were down 1.6% before
the bell
(http://www.marketwatch.com/story/chipotle-stock-climbs-after-earnings-beat-2019-10-22)
after the fast-Mexican company on Tuesday reported third-quarter
net income
(http://www.marketwatch.com/story/chipotle-stock-climbs-after-earnings-beat-2019-10-22)
of $98.6 million, or $3.47 a share, compared with $38.2 million, or
$1.36 a share, in the year-ago period. Adjusted for items such as
restaurant asset impairment expense and restructuring, among other
things, earnings were $3.82 a share.
How are other markets performing?
The 10-year Treasury note yield fell to 1.738% on Wednesday from
1.768% late Tuesday in New York. Mixed corporate has investors
favoring bonds as they wait out the results still due this week,
from Ford and Daimler to Microsoft and Boeing. In Europe, eyes are
on Brussels, where an EU agreement to delay Brexit may lead to U.K.
Prime Minister Boris Johnson seeking an early election.
West Texas Intermediate crude for November delivery shed 52
cents, or 1%, to
(http://www.marketwatch.com/story/oil-prices-set-for-second-skid-in-a-row-as-investors-fret-about-crude-demand-2019-10-21)
$53.96 a barrel on the New York Mercantile Exchange, after gaining
1.6%, a day ago. Crude oil resumed its decline as U.S. inventories
expanded for a sixth week, the longest run of gains in almost a
year.
Gold gained for a second day. Gold for December delivery on
Comex gained $8.30, or 0.6%, to trade at $1,495.70 an ounce, after
trading little changed on Tuesday.
The ICE U.S. Dollar Index , which tracks the performance of the
greenback against six major rivals, rose about 0.1% to 97.596.
Elsewhere, the Stoxx Europe 600 was trading down 0.3% at 393.51.
In Asia, China's CSI 300 index finished off 0.6% at 3,871.08 and
the Shanghai Composite Index slipped 0.4% to 2,941.62, while Hong
Kong's Hang Seng Index fell 0.8% to reach 26,566.73. Japan's Nikkei
225 gained 0.3% to 22,625.38.
(END) Dow Jones Newswires
October 23, 2019 08:12 ET (12:12 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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