Are These Companies Making the Markets Cry?

Although earnings reports from over 70 percent of companies have beaten analysts’ estimates this quarter, the disappointers packed a hard punch.

Disappointing earnings reports from a handful of companies had an outsized impact on the major American stock indices during Thursday’s trading session. The Dow Jones Industrial Average (NYSEARCA:DIA) lost 81 points to hit 14,537 for a 0.56-percent decline. The S&P 500 (NYSEARCA:SPY) fell 0.61 percent to close at 1,541.

The Nasdaq 100 (NASDAQ:QQQ) sank 1.44 percent to 2,741. The Russell 2000 (NYSEARCA:IWM) declined 0.58 percent to end the day at 901.

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Earnings misses from eBay (NASDAQ:EBAY) and IBM (NYSE:IBM) dragged down the tech sector on earnings, while SanDisk (NASDAQ:SNDK) got pummeled because of its refusal to expand manufacturing facilities to meet demand.

In other major markets, oil (NYSEARCA:USO) rose 2.03 percent to close at $31.64…

On London’s ICE Futures Europe Exchange, June futures for Brent crude oil (NYSEARCA:BNO, NYSEARCA:USO) advanced by $1.91, or 1.96 percent, to $99.60/bbl.

June gold futures (NYSEARCA:GLD) advanced by $8.10 (0.59 percent) to $1,390.80 per ounce.

Transports hit the brakes on Thursday, with the Dow Jones Transportation Index (NYSEARCA:IYT) slipping by 0.08 percent.

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The major European stock indices held near the breakeven level in the absence of any economic reports, while rumors circulated based on the theme that the European Central Bank might announce an interest rate cut.

The Euro STOXX 50 Index finished Thursday’s trading session with a 0.08-percent advance to 2,555 — remaining below its 50-day moving average of 2,648. Japan’s Nikkei 225 Stock Average (NYSEARCA:EWJ) fell 1.22 percent to 13,220 following a report that the nation’s trade deficit expanded by over 400 percent to a record high.

In China, the Shanghai Composite Index (NYSEARCA:FXI) advanced 0.17 percent to 2,197. Hong Kong’s Hang Seng Index (NYSEARCA:EWH) declined by 0.26 percent to 21,512.

Technical indicators reveal that the S&P 500 crossed below its 50-day moving average of 1,543  to close at 1,541, signaling the likelihood of a further decline. Its Relative Strength Index declined to 44.84, and the MACD made a significant drop below the signal line, suggesting more downward momentum.

For the day, most sectors finished solidly in negative territory. Energy and utilities managed to have a positive day. The healthcare sector’s decline was led by UnitedHealth (NYSEARCA:UNH), which missed its earnings target.

Consumer Discretionary (NYSEARCA:XLY):  -1.09 percent

Technology (NYSEARCA:XLK):  -1.05 percent

Industrials (NYSEARCA:XLI):  -0.47 percent

Materials (NYSEARCA:XLB):  -0.29 percent

Energy (NYSEARCA:XLE):  +0.86 percent

Financials (NYSEARCA:XLF):  -0.94 percent

Utilities (NYSEARCA:XLU):  +0.30 percent

Healthcare (NYSEARCA:XLV):  -1.24 percent

Consumer Staples (NYSEARCA:XLP):  -0.17 percent

Bottom line: The major American stock indices fell further into the red on Thursday as downbeat earnings reports from a small handful of companies had an outsized impact on the day’s trading trajectory.

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John Nyaradi is the author of The ETF Investing Premium Newsletter.

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