Earnings Bombs Drop the Dow — Tuesday’s IP Market Recap

by Marc Bastow | October 23, 2012 5:12 pm

[1]A market teetering around a cliff only needs one piece of bad news to fall off … and it got it. A Wall Street selloff accelerated throughout Tuesday amid disappointing reports from three industrial giants, then continued after Apple surprised analysts with a high price tag on its newly unveiled iPad mini.

Apple (NASDAQ:AAPL[2]) caught many off guard with an announced price of $329 on its 7-inch tablet[3], and investors fled almost immediately, sending AAPL shares to a 3% drop by the end of the day. Apple stock has lost 12% in a month, and is nearly 14% off its 52-week high.

Chemical maker giant DuPont (NYSE:DD[4]) lost 9% after it reported shockingly weak third-quarter earnings[5] and cuts to full-year guidance. 3M (NYSE:MMM[6]), makers of scotch tape and Post-It Notes, reported earnings in line with estimates[7], but missed revenue targets and guided down, sending shares back 4%. Lastly, aerospace conglomerate United Technologies (NYSE:UTX[8]) slid fractionally after it reported better-than-expected earnings[9], but missed on revenue targets and issued earnings and revenue guidance warning of its own.

The damage in the Dow spread to other economically sensitive stocks, as Alcoa (NYSE:AA[10]) shed just over 3%, while General Electric (NYSE:GE[11]) and Exxon Mobil (NYSE:XOM[12]) both lost more than 2%. The end result on the day was a drop in the Dow of 1.82% to 13,102.61, with all but two Dow components losing ground. The S&P followed suit, falling 1.44% to 1,413.11, while the Nasdaq dropped 0.88% to close at 2,990.46.

The earnings pain continued after the bell, as Netflix (NASDAQ:NFLX[13]) shares dropped 17% in early after-hours trading on Q3 earnings that plummeted to 13 cents per share from $1.16 a year ago; however, that figure still beat Wall Street expectations, and came on revenues that climbed roughly 10%. Additionally, cashflow went into the negative as NFLX continues to spend on developing original content.

Tuesday did see some earnings victories, however.

Also after the bell, Facebook (NASDAQ:FB[14]) finally got some good news as it reported sales improvement of 32% to $1.26 billion, topping analyst estimates of $1.23 billion. Facebook did post a loss of $59 million, or 2 cents a share, but an adjusted gain of 12 cents per share. FB shares were up 8% in early after-hours action.

During the day, Yahoo! (NASDAQ:YHOO[15]) saw its shares rise nearly 6% after Monday’s after-hours report, which showed Q3 growth. But much of the strength came on what investors heard on the call, when CEO Marissa Meyer discussed the company’s intended growth targets[16] in mobile. Also,

Coach (NYSE:COH[17]) reported earnings and revenues that matched Street estimates, as well as improved same-store sales figures, and the company also announced a stock buyback program. COH shares surged 10% by Tuesday’s close.

Finally, shares of Monster Beverage (NASDAQ:MNST[18]) tumbled by double-digits for the second straight day following Monday news of an FDA report that showed Monster Beverage products[19] were cited in five deaths last year.

Earnings season continues Wednesday with InvestorPlace  Real America Index[20] components General Dynamics (NYSE:GD[21]) and EMC (NYSE:EMC[22]), Dependable Dividend Stocks[23] AT&T (NYSE:T[24]) and Kimberly-Clark (NYSE:KMB[25]), and notables Lockheed Martin (NYSE:LMT[26]) and Citrix (NASDAQ:CTXS[27]).

Three Up

• Pandora (NYSE:P[28]): Up 9.2% (84 cents) to $9.94.
• Barnes and Noble (NYSE:BKS[29]): Up 6.5% (94 cents) to $15.38.
• Ryder Systems (NYSE:R[30]): Up 5.6% ($2.42) to $45.85.

Three Down

• SuperValu (NYSE:SVU[31]): Down 8.5% (27 cents) to $2.90 (Read more here[32]).
• Leap Wireless (NASDAQ:LEAP[33]): Down 6.6% (39 cents) to $5.51.
• Arch Coal (NYSE:ACI[34]): Down 5% (42 cents) to $7.99.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he was long AAPL, GE and XOM.

Source URL: https://investorplace.com/2012/10/earnings-bombs-drop-the-dow-tuesdays-ip-market-recap-aapl-dd-mmm-utx-aa-xom/

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