U.S. stocks closed lower Wednesday as investors digested earnings reports and weighed weaker-than-expected data.
“The market came into the week pretty overbought and with these earnings reports, (there’s) a little bit of a headwind,” said Bruce Bittles, chief investment strategist at RW Baird.
The Dow Jones industrial average closed down about 158 points after falling as much as 194 points, pressured by declines in Wal-Mart andBoeing. The index ended below the psychologically key level of 17,000 for the first time since Oct. 7.
Wal-Mart plunged 10 percent as the greatest weight on the Dow Jones industrial average,
“It’s all Wal-Mart. I think it’s rare to see a stock like Wal-Mart down 10 percent,” said Ryan Larson, head of equity trading, U.S., at RBC Global Asset Management (U.S.). “Wal-Mart’s what brought sentiment down this morning on (their comments about) future growth and earnings and what they see for 2016.”
The firm said Wednesday that it expects sales to be flat in fiscal year 2016. At the lows of the day, shares hit a three-year low and wiped out more than $20 billion in market cap, on track for its worst day in more than a decade.
The SPDR S&P Retail ETF (XRT) declined more than 1 percent, on track for a fourth-straight day of losses.
Boeing fell more than 4 percent, contributing nearly as much to declines in the Dow as Wal-Mart. The aircraft maker’s stock declined amid concerns about aircraft demand following Delta comments in its earnings call Wednesday about a “huge bubble in excess wide-body airplanes,” StreetAccount said.
The Dow transports traded slightly higher, with Ryder leading advancers and JetBlue the greatest decliner.
The Nasdaq composite tried to hold higher, as a rally of more than 10 percent in SanDisk on news it was exploring a potential sale boosted semiconductor stocks. The Market Vectors Semiconductor ETF (SMH)briefly jumped more than 3 percent. Intel also gained more than 1.5 percent, following earnings that beat on both the top and bottom line.
The S&P 500 held mostly lower after a brief attempt to turn positive as materials and energy led advancers with gains about 1 percent each. The index fell below the psychologically key level of 2,000 in intraday trade for the first time since Oct. 8. Consumer sectors were the greatest weights on the index.
“This has been a rally where the stocks that were beaten down most in the May-August period … are leading the way,” said Marc Chaikin, CEO of Chaikin Analytics.
“If you can revive the dead that’s good for the market,” he said.
U.S. retail sales barely rose in September as cheaper gasoline weighed on service station receipts, while producer prices posted their biggest decline in 8 months.
“The economic data (was) a bit disappointing and plays in to the Fed staying on hold, probably for the balance of the year,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
“I think what we’re seeing now is a rush into gold,” he said.
Gold futures settled up $14.40 at $1,179.80 an ounce.
In other economic news, August business inventories remained unchanged, slightly missing expectations for a 0.1 percent increase.
“Inventory growth has slowed to zero for two months straight as of August, a come down from the Q2 juiced GDP number,” Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
In the afternoon, the U.S. Federal Reserve’s latest Beige Book saidmodest overall economic expansion continues. The report said the stronger dollar was more of a headwind to the manufacturing sector than slowdown in China.
“I think the Beige Book probably just added to a weak tape in a low volume environment,” Larson said.
“In addition to commodity weakness you also have the 10-year under 2 (percent),” he said. “Under 2, it does tend to lend to a little more pessimism. “
The U.S. dollar traded more than half a percent lower against major world currencies, with the euro higher above $1.14 and the yen at 118.86 yen against the dollar.
Crude pared losses to settle down 2 cents, at $46.64 a barrel.
Stocks traded mixed in the open, with the S&P 500 near the flatline and the Nasdaq composite higher, while the Dow Jones industrial average was negative.
“The market was very overbought and we’re due to pull back,” said Adam Sarhan, CEO of Sarhan Capital. “Earnings expectations have been ratcheted down so many times that the barriers (shouldn’t be) very hard for them to beat.”
Wells Fargo also reported earnings that beat expectations.
“The market’s looking for any positives to come out of these earnings,” said JJ Kinahan, chief strategist at TD Ameritrade.
“We have Netflix later,” he said. “That one is going to be sort of interesting later. Can they continue their great growth and give us a bit of insight into what is going on worldwide?”
The video-streaming giant is scheduled to release results after the close. Citigroup and Goldman Sachs earnings are slated for Thursday before the bell.
Overseas, equities were lower after weaker-than-expected Chinese inflation data added to concerns about the health of the world’s second-biggest economy.
China’s consumer price index (CPI) rose 1.6 percent in September from a year earlier, against forecasts of a 1.8 percent rise from a Reuters poll and following August’s 2 percent gain.
China’s share markets slid into negative territory in the afternoon trading session, with the Shanghai Composite down nearly 1 percent. Major indices in Europe closed lower, with the DAX off more than 1 percent.
The S&P 500 traded down 8 points, or 0.42 percent, at 1,995, with consumer staples leading seven sectors lower and materials the greatest advancer.
The Nasdaq traded down 9 points, or 0.2 percent, at 4,786.
The CBOE Volatility index (VIX), widely considered as the best gauge for volatility, traded below 18.
Decliners were a step ahead of advancers on the New York Stock Exchange, with an exchange volume of 552 million and a composite volume of nearly 2.7 billion.
On tap this week:
Earnings: Citigroup, Goldman Sachs, UnitedHealth, US Bancorp, Schlumberger, Mattel, Advanced Micro Devices, Philip Morris, BB&T, Blackstone, Charles Schwab, WD-40
8:30 am: Consumer price index
8:30 am: Jobless claims
8:30 am: Empire State manufacturing survey
10:00 am: Philadelphia Fed business outlook survey
10:30 am: Natural gas inventories
10:30 am: New York Fed President William Dudley speaks
11:00 am: Oil inventories
Earnings: GE, Honeywell, Comerica, Kansas City Southern, SunTrust
9:15 am: Industrial production
10:00 am: JOLTS
10:00 am: Consumer sentiment
10:00 am: Atlanta Fed business inflation expectations
1:00 pm: Oil rig count
4:00 pm: Treasury International Capital