Wall St dips on mixed earnings

The ASX is set for a soft start after Wall St slipped despite analysts raising the prospect of better earnings growth.

Wall St slipped as earnings reports were mixed. Picture: AP Photo/Richard Drew.

US stocks fell overnight, with consumer-discretionary shares leading losses after a string of disappointing earnings reports.

European stocks closed mixed after fresh turmoil in the Italian banking sector and the unveiling of plans to expand Heathrow Airport in London.

The Australian share market is also set to dip, with ASX futures down 12 points at 7.25am (AEDT).

Major indexes have been largely driven by corporate earnings this week. With more than a quarter of S&P 500 companies having reported results, the index was on track for slight earnings growth in the third quarter from the year-earlier period, according to FactSet. That would mark a reversal after five straight quarters of declines.

“We’re seeing positive but not spectacular growth,” said Jon Adams, senior investment strategist at BMO Global Asset Management. “It looks like we might see some modest growth this quarter, so we’re off to a good start.”

But consumer-discretionary companies faltered Tuesday, leading declines in the S&P 500 with a 1.2 per cent drop.

The Dow Jones Industrial Average fell 54 points, or 0.3 per cent, to 18169. The S&P 500 declined 0.4 per cent, and the Nasdaq Composite lost 0.5 per cent.

Under Armour Class A shares slid 13 per cent after the athletic apparel maker, whose profits grew in the third quarter, tempered its growth expectations.

Whirlpool fell 11 per cent after the company said sales and profit fell more than expected and gave a downbeat outlook for the year.

General Motors shares fell 4.2 per cent. The automaker said net income doubled, but currency declines tied to the UK’s vote to leave the European Union could hurt its business in the fourth quarter.

Also Tuesday, the Conference Board said its index of consumer confidence dropped in October.

“It’s painting a mixed picture of the fourth quarter and I think that, coupled with the election issues, are keeping us in a flat market through the election,” said Peter Tuz, president of Chase Investment Counsel. “I think the fourth quarter is going to be a soft quarter,” he said.

Caterpillar said it expects economic weakness to continue to put pressure on its business in 2017. Shares fell 1.8 per cent after the company, which is also facing a leadership transition, said it could report a loss for 2016.

Still, US gross domestic product data for the third quarter is expected to show Friday that growth in the world’s biggest economy picked up.

“Stocks will continue to sort of grind up, in part because there’s nowhere else to go right now, in part because there’s liquidity there, and in part because they’re not yet way overpriced,” said Michael Cuggino, president and portfolio manager of the Permanent Portfolio Family of Funds.

Bond yields have crept up this month, a tentative sign that stronger economic growth — and worries that central banks have reached the limits of their powers — could put an end to the rally in fixed income.

The yield on the 10-year Treasury note was 1.758 per cent Tuesday, compared with 1.763 per cent Monday and 1.605 per cent at the end of September.

Lockheed Martin shares surged 7.4 per cent, on pace for their biggest one-day increase since 2009, after the company said it expects a jump in sales growth next year.

Shares of Procter & Gamble, the biggest gainer in the Dow industrials, rose 3.4 per cent after the consumer-goods company posted an unexpected rise in profit.

Elsewhere, the Stoxx Europe 600 fell 0.3 per cent. A weaker yen boosted Japan’s Nikkei Stock Average, which finished up 0.8 per cent at a six-month high.

Dow Jones