Wall Street slips after dismal Caterpillar, Boeing results

(Reuters) – U.S. stocks fell on Wednesday after bleak earnings from industrial bellwethers Caterpillar and Boeing exacerbated concerns of a slowing global economy that have roiled financial markets this year.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., July 16, 2019. REUTERS/Brendan McDermid

Caterpillar Inc (CAT.N), whose large exposure to China makes it a proxy for the global impact of trade tensions, dropped 5.8% after reporting a fall in quarterly earnings on cooling demand for construction machines in Asia.

The world’s largest planemaker (BA.N) matched that with its biggest loss in decades on the back of this year’s grounding of its best-selling 737 MAX planes after two deadly crashes. Boeing’s shares fell 1.2%.

Two weeks into the guts of an earnings season for which investors have already dialed down expectations, the manufacturing firms’ results came on the same day as a grim set of forward-looking surveys on the euro zone economy.

“Caterpillar’s results show that there is weakness in the Asia Pacific region, and if there is a slowdown there, where is the next pocket of slowdown, and people could start extrapolating from that,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

“Caterpillar’s earnings are more important than Boeing, because Boeing’s issues are more company specific.”

The bleak earnings of the industrial heavyweights resulted in the blue-chip Dow index .DJI falling more than the S&P 500 .SPX and Nasdaq .IXIC indexes.

Nearly 80% of the 104 S&P 500 companies to report so far have topped earnings expectations, and overall profits are expected to rise about 1%, according to Refinitiv, improving from a small decline estimated previously.

Shares of Texas Instruments Inc (TXN.O) jumped 7% and helped lift the Philadelphia chip index .SOX by 1.7%, after the company said a global slowdown in microchip demand would not be as long as feared as it posted quarterly profit and revenue that beat estimates.

At 9:43 a.m. ET, the Dow Jones Industrial Average was down 131.66 points, or 0.48%, at 27,217.53, the S&P 500 was down 2.97 points, or 0.10%, at 3,002.50. The Nasdaq Composite was down 5.07 points, or 0.06%, at 8,246.33.

Sentiment, however, remains shaky and other corporate news, including the announcement of a broad antitrust investigation by the U.S. Justice Department into the tech sector, fed into the losses.

The DoJ did not identify specific companies, but the terms of the review pointed to Alphabet Inc (GOOGL.O), Amazon.com Inc (AMZN.O) and Facebook Inc (FB.O). Shares of all three fell about 1% and weighed the most on indexes.

Facebook, which reports earnings later on Wednesday, was also the subject of a pair of settlements announced by regulators on privacy issues that included fines of more than $5 billion, again well-flagged previously.

Advancing issues outnumbered decliners by a 1.32-to-1 ratio on the NYSE and by a 1.04-to-1 ratio on the Nasdaq.

The S&P index recorded 19 new 52-week highs and no new low, while the Nasdaq recorded 29 new highs and 42 new lows.

Reporting by Amy Caren Daniel in Bengaluru; editing by Patrick Graham and Saumyadeb Chakrabarty

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