Yahoo Finance Dow sheds 200 points, US oil prices fall for 10th straight day
Stocks fell for a second consecutive day and oil prices extended a multi-session rout.
The S&P 500 (^GSPC) fell 0.92%, or 25.82 points, as of market close, with the tech and communication services sectors leading declines. The Dow (^DJI) slipped 0.77%, or 201.92 points, after shedding more than 300 points at its intraday low. The tech-heavy Nasdaq (^IXIC) slid 1.65%, or 123.98 points.
Oil prices continued to decline, with the contract for US West Texas Intermediate (CL=F) deepening into bear market territory and falling below $60 per barrel Friday before settling at $60.19. This is the 10th consecutive session of declines for the domestic benchmark.
Brent crude (BZ=F), the international benchmark, fell below $70 per barrel for the first time since April during intraday trading, sliding into a bear market. Concerns of a supply glut and weakened demand continue to put pressure on fuel prices.
Markets were muted after Federal Reserve officials on Thursday announced that they would not be raising the federal funds target range from between 2% and 2.25%. However, officials said in a statement that they expect “further gradual increases,” supporting analysts’ expectations for a fourth rate hike in December and further increases throughout 2019.
“US markets have started the day in the red, losing ground in the wake of a firm Federal Reserve commitment to keep raising interest rates. Concerns about weaker global growth, embodied by the weaker China PPI reading, have conspired to keep markets from enjoying further gains after Wednesday’s strength, but the overall picture remains encouraging,” said Chris Beauchamp, chief market analyst at IG.
“Given the size of the bounce in the past two weeks, some weakness in US markets is to be expected,” he added. “Continued falls in oil prices are weighing heavily on energy stocks, but we are seeing a small bounce in oil this afternoon ahead of next week’s IEA report, even if it puts barely a dent in the relentless downward move seen in oil prices over the past month.”
STOCKS: Apple-supplier Skyworks gives weak guidance, cites weakness in smartphone market
Shares of Skyworks Solutions (SWKS) tumbled after the semiconductor company provided guidance well below estimates, citing “unit declines in premium smartphones and overall China softness.” The company sees first quarter earnings per share of $1.91 and revenue between $1 billion and $1.02 billion, versus consensus estimates for $2.08 per share on revenue of $1.07 billion. The outlook prompted a slew of price target slashes from analysts from Bank of America, Needham & Co and B Riley FBR. Peer semiconductor stocks also declined, with the PHLX Semiconductor Sector Index (^SOX) falling 1.85%.
Disney (DIS) reported results that topped analysts’ expectations on the top and bottom lines, buoyed by strength in the entertainment giant’s studio and parks segments. Earnings came in at $1.48 per share on revenue of $14.31 billion, handedly beating the Street’s estimates of earnings of $1.34 per share on revenue of $13.73 billion. CEO Bob Iger also announced that the company’s new streaming platform and Netflix rival – slated for release in 2019 – will be called Disney+. The platform will include exclusive content including a new Star Wars and Marvel series. Shares of Disney rose 1.72% to $118 each as of market close.
Yelp’s (YELP) stock plummeted after the review forum platform announced disappointing third quarter results and a slowdown in new account growth. Revenue came in at $241 million versus consensus estimates of $245 million and projected fourth-quarter revenue guidance of between $239 million and $243 million.
“While the shift to non-term advertising has opened our sales funnel, it has also made our results more sensitive to short-term operational issues,” Yelp CEO Jeremy Stoppelman said in a statement. “We have begun to address a number of the issues that impacted our third quarter results; however, we expect them to affect our fourth quarter results as well.”
Shares of Yelp plummeted 26.68% to $31.90 per share as of market close.
Shares of General Electric (GE) tumbled after JP Morgan analyst Stephen Tusa slashed his price target for the company to $6 per share, the lowest on Wall Street to date. GE’s stock fell below $9 per share for the first time since March 2009. This comes following a weak earnings report last week for the company, where GE announced it would be slashing its quarterly dividend to just a penny per share, missed on the top and bottom lines and said it was facing an expanding probe into its accounting practices from the SEC and Justice Department.
“GE is a fundamentally strong company with a sound liquidity position,” a GE spokesperson told Yahoo Finance in response to Tusa’s note. “We are taking aggressive action to strengthen our balance sheet through accelerated deleveraging and position our businesses for success.”
Shares of GE are down about 50% for the year to date.
ECONOMY: Producer price index increases more-than-expected in October
The US producer price index for final demand increased 0.6% month-over-month in October, the Bureau of Labor Statistics said Friday, exceeding the 0.2% pace anticipated by economists polled by Bloomberg and the 0.2% rate from September. PPI increased 2.9% over last year versus a 2.6% year-over-year increase in the prior period.
Excluding food, energy and trade, PPI increased in line with expectations at 0.2% month-over-month and 2.9% over last year.
“The rise in core producer price inflation in October mostly reflects another big gain in the volatile margin components of services trade, transportation and warehousing,” Andrew Hunter, an economist at Capital Economics, wrote in a note. “Excluding those categories, the data suggest that the recent tariffs have had little upward impact on prices and that underlying domestic inflationary pressures may now be leveling off.”
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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