Wall Street leading indexes failed to keep their strong growth during Wednesday trading session and ended the day into the red amid mixed corporate earnings reports.
The technology index Nasdaq Composite finished the session with a fall of 0.23% to a level of 8,102.02 points after recording a new record throughout the day. In turn, the broader S&P 500 also declined by 0.22%, reaching 2,927.25 points. Energy and communications were among the worse performing sectors.
The blue-chip index Dow Jones Industrial Average also finished the session with a fall of 0.22%, to 26,597.05 points.
The decline of the leading indexes comes less than five months after the strong downturn in December, leading Wall Street to the worst year since the financial crisis. But the withdrawal of the Federal Reserve from the policy of higher interest rates and the alleviation of trade tensions between China and the US helped the markets to recover.
The technology sector has been at the forefront of growth, with a 36% increase since Christmas. Xerox shares are the best performing with an appreciation of almost 80%.
Corporate stocks performance
The shares of Caterpillar wiped out 3.2%, although the company posted better than expected earnings figures in the first quarter. However, it surprised the analysts with a 4% drop in sales of construction machinery in the Asia-Pacific region.
The telecom giant AT&T also contributed to the gloomy mood of the market. The company's shares dropped by 4% after it posted quarterly earnings that could not meet expectations.
Best Buy stock is up by 2% after Jefferies upgraded its rating to Buy.
The shares of Biogen were down by 1.9% following its first-quarter earnings report, while Novartis wiped out 3.2% of its market capitalization after reporting a bottom-line beat in its first quarter.
The stocks of T. Rowe Price Group rose by 2% on its upbeat first quarter.
Twitter stocks are down after meetings at the White House between CEO Jack Dorsey and President Donald Trump.
The shares of TE Connectivity rose by 6.70% after came out with quarterly earnings of 1.42 USD per share, beating the analysts' expectations of 1.27 USD per share.
Anadarko Petroleum appreciated by 11% after Occidental Petroleum offered to buy it for 38 billion USD, launching a potential bidding war for a company that agreed earlier this month to be purchased by Chevron Corp for about 33 billion USD.
The best performers of the session on the Dow Jones Industrial Average were Walt Disney Company (+1.3%), McDonald’s Corporation (+1.21%) and Nike Inc (+1.1%), while the worst performers of the session were Chevron Corp (-3.7%), Caterpillar Inc (-3.03%) and Dow Inc (-2.88%).
Corporate earnings reports
At the same time, the reporting season is running at full speed. So far, nearly 130 S&P 500 companies have made a profit for the first quarter of the calendar year. Of these, 78% reported better than projected earnings data.
Investors are watching closely this season of reports amid fears of company profits curtailment. Analysts expect the S&P 500 members' profit to shrink by 4.2%. Up to now, the growth rate of company profits is close to 2.4%.
AT&T missed Wall Street estimates for quarterly revenue on Wednesday, hit by lower-than-expected sales in its WarnerMedia unit and a shortfall in income from a wireless business where it has cut prices to draw in customers. AT&T has reduced its dependency on the phone business by buying media content through its acquisition of Time Warner, yet faces a daunting struggle to find growth as declines in one business offset growth in another. WarnerMedia, which includes Turner and premium TV channel HBO, reported revenue of 8.38 billion USD in the quarter, falling short of analysts’ estimates of 8.45 billion USD. However, that meant Mobility, AT&T’s largest segment which includes its wireless business, had revenue of 17.57 billion USD during the quarter, missing estimates of 17.65 billion USD.
Caterpillar reported better than expected earnings and revenue on Wednesday. In the year ago quarter, the company reported adjusted earnings per share of 2.82 USD on 12.9 billion USD in revenue. The industrial giant also raised its 2019 profit outlook. Caterpillar said it now expects a full-year profit per share between 12.06 USD and 13.06 USD, citing a tax benefit of 0.31 USD per share. Caterpillar said its first-quarter tax benefit of 178 million USD stems from US tax reform. The company previously expected 11.75 USD per share to 12.75 USD per share.
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