Stocks Sink Early Wednesday 04/25 09:16
U.S. stocks are slumping Wednesday after a steep drop the day before as
investors continued to worry that growing costs for critical materials along
with rising interest rates will affect profit growth for companies.
NEW YORK (AP) -- U.S. stocks are slumping Wednesday after a steep drop the
day before as investors continued to worry that growing costs for critical
materials along with rising interest rates will affect profit growth for
companies. Stock indexes in Europe and Asia are also taking losses. U.S. bond
yields are rising again.
KEEPING SCORE: The S&P 500 index tumbled 14 points, or 0.6 percent, to 2,619
as of 10 a.m. Eastern time. The Dow Jones industrial average lost 137 points,
or 0.6 percent, to 23,886. The 30-stock index has fallen for five days in a
row. The Nasdaq composite declined 68 points, or 1 percent, to 6,939. The
Russell 2000 index of smaller-company stocks dipped 11 points, or 0.8 percent,
PAYING THE COST: Stocks slumped Tuesday after heavy machinery maker
Caterpillar said it doesn't expect to top its first-quarter earnings for the
rest of this year. Company profits fuel the stock market, and when they are
rising, stocks tend to do well. Investors expected strong profit growth this
year thanks to the growing global economy and the corporate tax cut President
Donald Trump signed at the end of 2017. That sent stocks to record highs in
But the comments from Caterpillar's executives, as well as from other major
companies like 3M and Sherwin-Williams, had investors worrying about whether
that growth will show up. On Wednesday Goodyear Tire & Rubber said higher raw
materials costs and weaker demand hurt its business in the first quarter. Its
stock fell 5.6 percent to $25.37.
Industrial companies continued to struggle. Defense contractor General
Dynamics shed 5.6 percent to $209.50 after its first-quarter report and
Northrop Grumman sank 6.5 percent to $319.45.
Aerospace company Boeing was an exception, as it topped Wall Street's
estimates and raised its forecasts for the year. Boeing rose 1.1 percent to
BONDS: Investors may have also been worried about rising interest rates, as
they tend to slow down economic growth by making it more expensive for people
and companies to borrow money. Bond prices fell again Wednesday, sending yields
higher. The yield on the 10-year Treasury note kept setting four-year highs as
it rose to 3.02 percent from 3 percent.
Low interest rates have played an important role in the economic recovery of
the last decade, and the yield on the 10-year note is a benchmark for many
kinds of interest rates including mortgages. It's been climbing because
investors expect higher economic growth and inflation.
While rising rates usually mean bigger profits for banks, those stocks
struggled Wednesday. Capital One lost 3.3 percent to $94.19 after its
first-quarter report. Investment bank Morgan Stanley fell 1.9 percent to $52.05.
SKY TUSSLE: Media conglomerate Comcast offered to buy British broadcaster
Sky for 22 billion pounds ($30 billion). Sky had previously accepted an offer
from 21st Century Fox, and its shares gained 3.6 percent in London. Comcast
rose 1.6 percent to $33.85 and Fox gained 1.1 percent to $36.42.
OVERSEAS: France's CAC 40 was down 0.9 percent while Germany's DAX fell 1.6
percent. Britain's FTSE 100 lost 1.2 percent. Japan's benchmark Nikkei 225 shed
0.3 percent. Hong Kong's Hang Seng lost 1.1 percent and South Korea's Kospi
lost 0.6 percent.
CURRENCIES: The dollar rose to 109.17 yen from 108.67 yen. The euro fell to
$1.2188 from $1.2237.
COMMODITIES: Benchmark U.S. crude oil rose 8 cents to $67.78 in New York.
Brent crude, used to price international oils, fell 27 cents to $73.59 a barrel
Gold fell 0.7 percent to $1,324.10 an ounce and silver sank 0.8 percent to
$16.57 an ounce.