Stocks ended lower Tuesday in a choppy session of trading as investors digested a deluge of corporate earnings results and continued to monitor trade and Brexit developments.
The Dow fell after components The Travelers Companies (TRV) and McDonald’s (MCD) posted disappointing earnings. And shares of Merck (MRK), another Dow component, also dropped after a lung cancer treatment developed by competitor Bristol-Myers Squibb (BMY) hit a key development milestone.
Other major companies reporting results today included Kimberly-Clark (KMB), Procter & Gamble (PG), UPS (UPS), Hasbro (HAS), Texas Instruments (TXN), Lockheed Martin (LMT), United Technologies (UTX), Whirlpool (WHR), and Snap (SNAP).
Here’s where the markets settled Tuesday:
S&P 500 (^GSPC): -0.33%, or 10 points
Dow (^DJI): -0.13%, or 33.91 points
Nasdaq (^IXIC): -0.72%, or 58.69 points
10-year Treasury yield (^TNX): -2.3 bp to 1.769%
WTI crude oil prices (CL=F): 1.6% to $54.16 per barrel
Gold (GC=F): +0.19% to $1,490.90 per ounce
Overseas, the pound fell against the dollar and euro (GBPUSD=X, GBPEUR=X) after key Brexit votes Tuesday afternoon ET elicited mixed results for Prime Minister Boris Johnson’s Brexit plan and timeline.
In a 329-299 decision, the British House of Commons voted in favor of moving forward with the Brexit plan Prime Minister Boris Johnson had negotiated with EU officials last week. This came just three days after Johnson had failed to clinch the support he needed to push his version of the agreement to the next legislative step over the weekend, and represents a victory for the prime minister after his predecessor Theresa May failed three times to get the chamber to back her iterations of a Brexit deal.
But in a separate vote, the chamber decided not to proceed on Johnson’s expedited timetable to try and deliver a Brexit deal by the October 31 deadline he’s been pushing to meet. This means the EU will likely grant an extension to the withdrawal process, providing more time for Parliament’s upper chamber, the House of the Lords, to review the bill.
In the U.S., economic data releases Tuesday included existing home sales, with the National Association of Realtors reporting a larger-than-expected drop in September. Sales of previously owned homes fell 2.2% to a seasonally adjusted annual rate of 5.38 million, while August’s level was slightly upwardly revised to see a 1.5% rise over the month prior to 5.50 million. Consensus economists had expected just a 0.7% drop in September, according to Bloomberg data.
Meanwhile, the Richmond Fed’s Manufacturing Index posted a surprise rebound in October to 8, from -9 reported in September, with all three components including shipments, new orders and employment increasing. The results underscore an at least temporary improvement in manufacturing conditions for the regional Fed zone, on the heels of a year’s worth of softening data on the domestic manufacturing sector. Consensus economists had expected the regional Fed index to hold in negative territory at -7 for the month.
Fed speakers remain in a pre-meeting quiet period and will not deliver public remarks. Markets priced in a 94% probability of a third consecutive quarter-point interest rate cut – a cycle high – as of Tuesday morning, according to CME Group data.
Toy company Hasbro (HAS) posted a steep miss on quarterly earnings and revenue Tuesday morning, citing the impact of tariffs on its results. Third-quarter adjusted earnings per share totaled $1.84 on revenue of $1.58 billion, while consensus analysts had anticipated adjusted EPS of $2.21 on sales of $1.72 billion. Hasbro shares fell more than 16% Tuesday.
“Hasbro remains on track to deliver profitable revenue growth in 2019, behind innovation in gaming, toys and around Hasbro’s Brand Blueprint, CEO Brian Goldner said in a statement. “However, as we’ve communicated, the threat and enactment of tariffs reduced revenues in the third quarter and increased expenses to deliver product to retail.”
McDonald’s (MCD) posted a rare miss on quarterly profit and weaker-than-expected sales gains in its key North American market as rising competition in the fast-food sphere crimped results. Earnings per share totaled $2.11 for the quarter, or 10 cents below consensus, and revenue of $5.43 billion also came in short against the $5.49 billion expected. U.S. same-store sales, a closely watched metric of efficiency for the fast food chain, climbed just 4.8%, versus 5.2% expected.
Consumer goods company Procter & Gamble (PG) posted estimates-topping quarterly results and raised its full-year guidance, sending shares 4% higher around market open. Core earnings per share of $1.37 topped expectations by 13 cents.
Closely watched organic revenue growth, which strips out factors like currency impacts, rose 7%, exceeding the 4.15% growth rate expected. Results were driven largely by a surge in beauty product organic sales, which grew 10% during the quarter versus 6.17% expected.
UPS (UPS) posted stronger-than-expected adjusted EPS for the quarter while sales came in light, and announced its Chief Operating Officer Jim Barber would be retiring at the end of the year. Adjusted earnings of $2.07 per share topped expectations by a penny, while sales of $18.32 billion fell slightly short of the $18.37 billion anticipated. The delivery giant also revised its adjusted free cash flow guidance to be above $4 billion for the year, from as little as $3.5 billion previously indicated.
Under Armour (UAA) announced Tuesday that CEO and founder Kevin Plank will step down and be replaced by President and Chief Operating Officer Patrik Frisk. Plank, who founded the athletic-wear brand in 1996, will transition to become executive chairman and brand chief. The leadership changes will take effect January 1. Shares of Under Armour rose around 6% during intraday trading and have underperformed against the broader market this year, rising 13.7% versus the S&P 500’s near 20% advance.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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