From The Associated Press
NEW YORK —
Disappointing quarterly results, including a subscriber slump at AT&T and a weak profit forecast from Procter & Gamble, held back the stock market Wednesday.
The results from the two big-name companies came on a day when many corporations reported their first-quarter performance, with mixed results. The Dow fell 0.2 percent, while the Standard & Poor’s 500 index was flat.
P&G, the maker of Tide detergent and Gillette razors, dropped 5.3 percent to $77.65 after its profit forecast missed expectations from financial analysts who follow the company. A mixed response to the company’s new products is weighing on its prospects.
AT&T dropped 5.8 percent to $36.75 after it lost phone subscribers from its contract-based plans as smartphone sales slowed.
Investors were also disappointed by sales growth at biotech giant Amgen and flat revenues at drugmaker Eli Lilly.
The prices of oil and gold rose and the yield on the benchmark 10-year Treasury note was unchanged.
Investors are taking their cue from a heavy dose of quarterly earnings this week.
While the majority of companies have reported better-than-expected profits so far, their sales haven’t been as strong, suggesting they are struggling to grow.
Sixty-nine percent of companies in the S&P 500 have beaten expectations, better than the 10-year average of 62 percent, according to S&P Capital IQ. However, only 42 percent have beaten revenue forecasts.
Looking ahead, the outlook dims. Of the 35 companies that have given earnings forecasts for the second quarter, 28 are “negative,” according to S&P Capital IQ, with only four “positive” and three “in-line.”
“We think that most managements are appropriately cautious in their outlooks, because it’s very possible that the second-quarter will continue to slow,” said Jim Russell, a regional investment director at U.S. Bank. “We’re watching with cautious optimism that this is a second-quarter-only soft patch in the economic data.”
A report Wednesday that orders for long-lasting U.S. factory goods fell more than economists expected added to signs that global growth is cooling.
The Commerce Department said orders for durable goods declined 5.7 percent in March following a 4.3 percent gain the previous month. February’s figure was also revised lower.
The Dow Jones industrial average was down 0.2 percent at 14,688 in early afternoon trading Wednesday. The S&P 500 index rose a fraction of a point to 1,579. The Nasdaq composite was down three points, or 0.1 percent, at 3,267.
Stocks logged their biggest weekly drop in five months last week after growth in China, the world’s second-biggest economy, slowed. Weaker hiring and manufacturing growth have also weighed on the stock market this month.
The market’s gains in April have been modest after a first-quarter surge that pushed both the Dow and the S&P 500 to record highs. The Dow is up just 0.8 percent in April while the S&P 500 has gained 0.6 percent.
During the first three months of the year, the Dow and the S&P 500 averaged monthly gains of more than 3 percent, driven by optimism that the housing and job markets were recovering and that company earnings would continue to climb.
There were some bright spots for investors Wednesday.
Yum Brands, which owns KFC, Pizza Hut and Taco Bell, was among the gainers, advancing 7 percent to $68.70. Yum reported earnings late Tuesday that exceeded the expectations of financial analysts.
General Dynamic, the aerospace and defense company, also surged after posting a profit that was better than expected. The stock jumped 5.3 percent to $70.66.
Boeing climbed 3.6 percent to $91.27 after the airplane maker said its first-quarter net income rose 20 percent despite problems with the 787 Dreamliner. The company said it would still meet its financial and delivery targets this year.
In government bond trading, the yield on the 10-year Treasury note was little changed at 1.71 percent.