US stocks paused this week following a stream of corporate earnings that were solid enough to maintain the year’s gains, but not quite good enough to push the rally forward.
The Dow Jones Industrial Average and S&P 500 bolted to new records on Tuesday ahead of a decision by the US Federal Reserve to keep an aggressive monetary stimulus program going. However, all three indices cooled on two of three subsequent days, resulting in a mixed performance for the week.
The Dow advanced 45.27 points (0.29 percent) to 15,615.55. The broad-based S&P 500 edged 1.87 points (0.11 percent) higher to 1,761.64, while the tech-rich NASDAQ Composite Index fell 21.32 points (0.54 percent) to 3,922.04.
As the last big week of third quarter’s earnings played out, the pattern of solid, but unspectacular earnings continued. Several large companies reported big declines in earnings, yet still exceeded expectations.
“Earnings seem to be driving the market and earnings are pretty good,” said Anthony Conroy, head of global trading trader at BNY Convergex Group.
Third-quarter earnings for the S&P 500 are now projected to have grown 5.2 percent compared with last year, S&P Capital IQ said.
Pharmaceutical giant Pfizer bested analysts’ forecasts for earnings even as revenues slightly underperformed and overall company profit dipped 19 percent on lower sales. Pfizer is contending with diminished sales due to the patent expiration of drug blockbusters such as cholesterol drug Lipitor and erectile dysfunction drug Viagra. However, investors pushed Pfizer shares up 1.7 percent on Tuesday on higher sales from products like nerve and muscle drug Lyrica and progress on a pipeline of other drugs.
Exxon saw profit decline 18 percent due to a huge deterioration in its refining business, but its earnings still bested analysts’ expectations by US$0.02 at US$1.79 per share, as the company snapped a losing streak of oil and gas production declines. General Motors (GM) earnings fell 53 percent due to higher taxes and equity buybacks. Without these one-time items, GM profits exceeded forecasts of US$0.93 per share by US$0.03.
“We made gains in the third quarter, as we improved our North American margins and increased our global share on the strength of our Chevrolet brand,” GM chief executive Dan Akerson said.
GM also closed the week on a high, reporting that US sales last month rose 16 percent. In contrast, Apple and Facebook both finished the week lower even as they bested forecasts earnings. Analysts worried that Apple’s guidance suggested lower profit margins in the fourth quarter, while Facebook’s comments about a decline in interest among younger teens generated concern.
“The kids are Facebook’s seed corn, and you don’t want to lose that,” Silicon Valley analyst Rob Enderle said.
Other problematic earnings came from insurer AIG, which acknowledged that a large planned divestiture of its aircraft leasing business could fall through; Western Union, which said profits would be hit by higher regulatory compliance costs; and Avon, which warned of a penalty in a longstanding foreign bribery probe that was “significantly greater” than hoped. All three companies fell precipitously after announcing their earnings.
Stocks were lifted in the first half of the week as investors looked ahead to Wednesday’s meeting of the Federal Open Market Committee, which, as expected decided to keep an US$85 billion per-month bond-buying program going due to continued concern about the economic recovery.
However, the markets ran out of steam after that.
Investors will continue to assess economic data through the lens of the Fed’s plans on tapering the stimulus program. Next week’s schedule includes last month’s jobs report and the first estimate of third-quarter economic growth.
The Fed will be closely looking at the jobs data to determine whether the partial government shutdown “had a long-term effect, or if it’s just going to cause blip during the month of October,” Kenjol Capital Management portfolio manager David Levy said.
“The result will affect the Fed and their policy,” he said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained