10/1/2014

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Business

U.S. stocks slump as earnings disappoint

U.S. stocks slump as earnings disappoint
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NEW YORK (AP) - U.S. stocks slumped Thursday as investors reacted to disappointing corporate earnings reports and assessed the implications of the approaching end to economic stimulus from the Federal Reserve. That stimulus has underpinned gains in the stock market for years. Argentina's stock market plunged after the South American nation defaulted on its debt for the second time in 13 years.

KEEPING SCORE: The Standard & Poor's 500 index dropped 24 points, or 1.3 percent, to 1,945 as of 11:11 a.m. Eastern time. The Dow Jones industrial average fell 171 points, or 1 percent, to 16,709. The Nasdaq composite dropped 68 points, or 1.5 percent, to 4,394.

ORGANIC MAINSTREAM: Whole Foods Market fell $1.86, or 4.8 percent, to $37.27 after reporting quarterly sales that fell shy of Wall Street expectations. The upscale grocer also lowered its sales forecast for the year. That raised worries about the intensifying competition Whole Foods is facing. The company, based in Austin, Texas, has enjoyed growth as more Americans move to eat diets they feel are wholesome. More recently, however, it products have become more mainstream.

OIL PRODUCTION WOES: Exxon Mobil fell $2.34, or 2.3 percent, to $100.90 after the energy company said that oil and gas production slipped 6 percent, disappointing analysts. Oil and gas production fell to 3.84 million barrels of oil and gas per day from 4.15 million barrels last year. The decline was driven by the expiration of rights to a field in Abu Dhabi and natural field declines.

BAD MEAT: Yum Brands slumped $4.03, or 5.5 percent, to $68.97 after he owner of the KFC and Pizza Hut fast-food chains said Thursday a food safety scandal in China that involved repacked meat has hurt sales and might be severe enough to cut into the company's global profit. Yum said in a regulatory filing that it was too early to know when sales might rebound.

BAD BOOKS: L-3 Communications plunged $19.02, or 15.9 percent, to $100.63 after the company reported that it was investigating accounting irregularities at is Aerospace Systems unit. The company said it expects to incur a charge of $84 million and cut its earnings forecast for the second half of the year.

ARGENTINE STOCKS: Argentina's stock market slumped 680 points, or 6.8 percent, to 8,256. The collapse of talks with U.S. creditors Wednesday sent Argentina into its second debt default in 13 years and raised questions about what comes next for the South American nation's staggering economy.

EUROPEAN STOCKS: In Europe, Germany's DAX was down 168 points, or 1.8 percent to 9,427. Britain's FTSE 100 eased 34, or 0.5 percent, to 6,738 and France's CAC dropped 56, or 1.3 percent, to 4,255.

RUSSIAN CHILL: European stocks were weighed by evidence that the standoff between the West and Russia is hurting companies. Germany's machinery industry cut its forecast for production growth this year sharply, citing the crisis in Ukraine. Sports goods maker Adidas saw its shares slump 12 percent after it issued a profit warning because the tensions with Moscow were creating bad business conditions.

OIL OFF THE BOIL: Benchmark U.S. crude for September delivery dropped by 64 cents, or 0.6 to $99.64 a barrel. After running up to $107 in June, it has steadily fallen back as fears of supply disruptions from Russia and the Middle East ebbed.

BONDS, CURRENCIES: Prices for U.S. government bonds were little changed. The yield on the 10-year Treasury note held steady at 2.56 percent. The euro weakened to $1.3381. The dollar was little changed at 102.83 yen.

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Johnson reported from Mumbai, India.
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