Dismal corporate earnings reports and lower oil prices dragged the major indices into negative territory on Tuesday. Among the S&P 500 industry groups, the technology sector gained the most. Financials, followed by utilities stocks ended on the losing side.
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The Dow Jones Industrial Average (DJI) declined 0.2% to close the day at 15,750.67. The S&P 500 lost 0.2% to finish yesterday’s trading session at 1,767.69. The tech-laden Nasdaq Composite Index increased marginally to end at 3,919.92. The fear-gauge CBOE Volatility Index (VIX) gained almost 2.3% to settle at 12.82. Consolidated volumes on the New York Stock Exchange were roughly 3.22 billion shares. This was below the five day average closing volume of about 6.4 billion, as per BATS exchange data. Declining stocks outnumbered the advancers. For the 61% that declined, only 36% advanced.
NRG Energy Inc. (NYSE:NRG) was one of the biggest losers in the S&P 500 index yesterday. The stock fell by 98 cents, or 3.5%, to $27.06 per share. The company posted earnings per share of 73 cents, falling behind Street estimates and also behind the Zacks consensus estimate of 80 cents per share. Additionally, the company lowered its 2014 adjusted EBITDA to the range of $2.7–$2.9 billion compared to $2.85–$3.05 billion previously.
News Corp (NASDAQ:NWSA) also reported dismal numbers late on Monday which subsequently impacted investors sentiment yesterday. Net income in the first fiscal quarter, ending September, was $27 million, or 5 cents per share, in comparison to $92 million, or 16 cents per share, a year earlier.. The company’s revenues dropped year on year, hurt by lower advertising revenues. Earnings also missed the Street’s estimates.
Separately, DISH Network Corp (NASDAQ:DISH) reported better-than-expected quarterly results and shares rose 6% to $50.35. The company reported net income of $315 million, or 68 cents per share, in the current quarter, in comparison to a net loss of $158 million, or 35 cents per share, in the previous year. D.R. Horton, Inc.’s (NYSE:DHI) fourth quarter earnings grew 33.3% year over year. Shares jumped 4.7 % to $18.91, which made the stock the S&P 500’s biggest gainer in terms of percentage gains.
Markets were also affected by the 2% drop in oil prices yesterday to a five-month low as the market expects a second increase in domestic supplies. Energy stocks were affected widely, with Pioneer Natural Resources (NYSE:PXD) dropping 3% and Chevron Corporation (NYSE:CVX) losing 0.9%. Other stocks such as Exxon Mobil Corporation (NYSE:XOM), Schlumberger Limited. (NYSE:SLB) and ConocoPhillips (NYSE:COP) slipped 0.3%, 2.0% and 1.0% respectively.
Oil prices had skidded nearly 9% last month. The U.S. average price paid for a gallon of gasoline dropped by a penny to $3.18 in January 2013, according to the American Automobile Association (AAA). The price has declined by 6 cents from last week and is down 26 cents from last year.
There were some positives for the market as well. US Airways Group Inc. (NYSE:LCC) and American Airlines merged to become the world’s largest airline company. This was approved by the government after the tow companies agreed to provide low cost airlines access to many important U.S. airports, including New York and Washington.
This in turn helped, JetBlue Airways Corporation (NASDAQ:JBLU) to gain 47 cents, or 6.1% to reach $8.16 per share. Southwest Airlines Co. (NYSE:LUV) also 1.2 % in its share price to settle at $18.03 per share. The members of the department of justice have named the settlement a major uplift to the competition at the key major airports later.
Of the top ten S&P 500 industry groups, technology stocks gained the most. The Technology SPDR (XLK) gained 0.27%. Stocks such as Apple Inc. (NASDAQ:AAPL), Google Inc. (NASDAQ:GOOG), International Business Machines Corp. (NYSE:IBM), AT&T Inc. (NYSE:T), and Verizon Communications Inc. (NYSE:VZ) gained 0.2%, 0.1%, 0.1%, 0.4%, and 0.4%respectively.
The financial sector was the biggest loser among the S&P 500 industry groups and the Financial Sector SPDR (XLF) lost 0.9%. Stocks such as Berkshire Hathaway Inc. (NYSE:BRK.B), Wells Fargo & Co (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corp (NYSE:BAC), and Citigroup Inc. (NYSE:C) slipped 1.3%, 1.1%, 0.2%, 0.6%, and 1.3%, respectively.
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