Benchmarks ended mostly lower yesterday, dragged down by weak corporate earnings results. A drop in the initial claims numbers failed to lift benchmarks to the green and the S&P 500 had to retreat from an all-time high. The index returned to the red zone considering the year-to-date period. Financials were among the biggest decliners, dragged by weak results from behemoths Citigroup and Goldman Sachs.
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The Dow Jones Industrial Average (DJI) was down 0.4% to close at 16,417.01. The Standard & Poor 500 (S&P 500) dropped 0.1% to finish yesterday’s trading session at 1,845.89. The tech-laden Nasdaq Composite Index was the only gainer and it moved up 0.1% to 4,218.69. The fear-gauge CBOE Volatility Index (VIX) gained 2.04% to settle at 12.53. Total volume on the New York Stock Exchange was 3.49 billion. However, advancers outnumbered the decliners on the NYSE, as for 56% stocks that gained, 41% stocks ended lower.
Markets’ movement was dominated by the earnings results, which, however, were more of a disappointment. Goldman Sachs Group Inc (NYSE:GS) was the second biggest drag on the blue-chip index and Best Buy Co., Inc. (NYSE:BBY) was the biggest loser in the S&P 500. These stocks ended 2.0% and 28.6% lower, respectively, owing to their dismal performances.
Goldman Sachs’ fourth-quarter 2013 earnings per share dropped to $4.60 from $5.60 in the year-ago quarter. Also, Goldman’s net revenue declined 5% year over year to $8.8 billion in the quarter. Another financial heavyweight, Citigroup Inc (NYSE:C) also disappointed as its fourth-quarter 2013 earnings per share fell 82 cents short of estimates. Revenues inched a percent downwards from the last-year quarter to $17.8 billion. Citigroup’s shares ended 4.4% lower, further damaging the broader financial sector. The Financial Select Sector SPDR (XLF) was down 0.6% and the sector was among the biggest losers.
The retail sector too was a big loser and the SPDR S&P Retail ETF (XRT) dropped 0.8%. This was largely due to the 28.6% decline in Best Buy. This consumer electronics chain reported 0.8% drop in holiday sales. It also anticipated wider-than-expected fall in operating margins. Last week, retailers including Bed Bath & Beyond Inc (NASDAQ:BBBY), Target Corporation (NYSE:TGT) Family Dollar Stores, Inc. (NYSE:FDO) had trimmed their yearly guidance. Yesterday, these stocks dropped 0.3%, 1.2% and 0.7%, respectively.
Also, CSX Corporation (NYSE:CSX) failed to meet earnings estimates. The company reported fourth quarter 2013 earnings of 42 cents per share, a penny short of estimates as well as its last-year quarter’s figure. The railroad operator also cautioned about weak coal demand restricting it from achieving its profit targets.
The dismal earnings results dampened the news of a drop in initial claims. The U.S. Department of Labor reported initial claims to have dropped 2,000 to 326,000 in the week ending January 11. Separately, the U.S. Bureau of Labor Statistics reported Consumer Price Index for All Urban Consumers (CPI-U) to have increased 0.3% last month. The gain was in line with consensus estimate.