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Dow retreats as 3M results disappoint

The Dow ended lower Thursday as manufacturing giant 3M (MMM) shares slumped on the heels of disappointing quarterly earnings and guidance. However, advances in tech shares helped keep the Nasdaq in the green and the S&P 500 roughly flat by the end of regular trading.

The S&P 500 (^GSPC) ticked down 0.04%, or 1.08 points, as of market close. The Dow (^DJI) fell 0.51%, or 134.97 points, paring some losses spurred after 3M reported results before-the-bell.

3M, a multinational conglomerate that produces a broad range of products including Scotch Tape, Post-It Notes and air filters, serves as a bellwether for the stock market as a whole. The company called out weakness in its China, automotive and electronics segments as driving a year-over-year sales decline.

The stock also weighs heavily in the Dow, a price-weighted index. 3M’s share decline of 12.94%, or $28.35, as of market close generated an about 190-point drag on the index.

Dow futures took a leg lower just after 6:30 a.m. ET, the time that 3M posted its quarterly earnings results.

The Nasdaq (^IXIC) rose 0.21%, or 16.67 points, as major tech companies posted strong quarterly results throughout the week. Notably, Facebook (FB) shares were up more than 5.5% as of market close, after the social media giant exceeded revenue and monthly active user expectations in the first-quarter in results reported Wednesday evening. Microsoft (MSFT) shares jumped 3.3% after the company beat expectations on the bottom lines and improving its margins. The software giant’s market capitalization briefly topped $1 trillion around market open.

Before the bell, 3M reported that it would lay off 2,000 members of its global workforce and lowered its forecast for full-year earnings, sending shares tumbling as much as 10% in early trading. The company now sees adjusted earnings in the range of between $9.25 to $9.75 per share, down from the $10.45 to $10.90 it guided previously.

This marks the second reduction to 3M’s bottom-line forecast in three months.

The company delivered first-quarter adjusted EPS of $2.23 on net sales of $7.86 billion, missing expectations for earnings of $2.48 on revenue of $8.02 billion, according to Bloomberg data.

3M CEO Mike Roman in a statement called the first quarter a “disappointing start to the year.”

“We continued to face slowing conditions in key end markets which impacted both organic growth and margins, and our operational execution also fell short of the expectations we have for ourselves,” Roman said. “As a result, we have stepped up additional actions – including restructuring – to drive productivity, reduce costs, and increase cash flow as we manage through challenges in some of our end markets.”

ECONOMY

Durable goods orders came in higher-than-expected based on March’s advanced reading, and core capital good orders posted their largest advance in 8 months. New orders for durable goods, or those meant to last three years or more, rose 2.7% in March, ahead of expectations for a 0.8% increase. Non-defense new orders for capital goods excluding aircraft – the so-called “core” reading of equipment spending that serves as a proxy for business spending – rose 1.3%, surging ahead of expectations for a 0.2% increase. However, shipments for non-defense capital goods excluding aircraft unexpectedly declined in March, falling 0.2%, versus a 0.1% rise expected.

“The strong rise in durable goods orders in March was driven in part by a surge in underlying capital goods orders which, together with stronger retail sales last month, suggests the economy is carrying more momentum into the second quarter,” Michael Pearce, senior U.S. economist for Capital Economics, wrote in a note Thursday.

“But a fall back in underlying capital goods shipments means business investment growth still slowed in the first quarter,” he added. “Moreover, the better news on investment was arguably overshadowed by the surge in jobless claims last week.”

Initial jobless claims rose more-than-anticipated for the week ending April 20, rising to 230,000, versus 200,000 expected. New unemployment claims for the week prior were upwardly revised by 1,000 to 193,000.

Continuing jobless claims, however, fell more-than-expected to 1.655 million for the week ending April 13. Consensus expectations were for new jobless claims of 1.682 million, while the previous week’s claims were upwardly revised slightly to 1.654 million.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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