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

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

IPMarketRecap Earnings Bombs Drop the Dow    Tuesday's IP Market Recap[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 InvestorPlaceĀ  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

Three Down

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

Endnotes:
  1. [Image]: http://www.investorplace.com/hot-topics/investorplace-market-recap/
  2. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  3. announced price of $329 on its 7-inch tablet: http://investorplace.com/2012/10/apple-drops-the-ipad-mini-and-a-bombshell/
  4. DD: http://studio-5.financialcontent.com/investplace/quote?Symbol=DD
  5. shockingly weak third-quarter earnings: http://investorplace.com/2012/10/dupont-stock-slammed-as-earnings-crater/
  6. MMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=MMM
  7. reported earnings in line with estimates: http://investorplace.com/2012/10/3m-cuts-2012-earnings-outlook-shares-drop/
  8. UTX: http://studio-5.financialcontent.com/investplace/quote?Symbol=UTX
  9. it reported better-than-expected earnings: http://investorplace.com/2012/10/united-technologies-lowers-2012-sales-forecast/
  10. AA: http://studio-5.financialcontent.com/investplace/quote?Symbol=AA
  11. GE: http://studio-5.financialcontent.com/investplace/quote?Symbol=GE
  12. XOM: http://studio-5.financialcontent.com/investplace/quote?Symbol=XOM
  13. NFLX: http://studio-5.financialcontent.com/investplace/quote?Symbol=NFLX
  14. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  15. YHOO: http://studio-5.financialcontent.com/investplace/quote?Symbol=YHOO
  16. intended growth targets: http://investorplace.com/2012/10/yahoo-is-drinking-the-mobile-kool-aid/
  17. COH: http://studio-5.financialcontent.com/investplace/quote?Symbol=COH
  18. MNST: http://studio-5.financialcontent.com/investplace/quote?Symbol=MNST
  19. Monster Beverage products: http://investorplace.com/2012/10/monster-beverage-linked-deaths-tragic-yes-lawsuit-worthy-no/
  20. Real America Index: http://investorplace.com/real-america-index/
  21. GD: http://studio-5.financialcontent.com/investplace/quote?Symbol=GD
  22. EMC: http://studio-5.financialcontent.com/investplace/quote?Symbol=EMC
  23. Dependable Dividend Stocks: http://investorplace.com/dividend-paying-stocks/
  24. T: http://studio-5.financialcontent.com/investplace/quote?Symbol=T
  25. KMB: http://studio-5.financialcontent.com/investplace/quote?Symbol=KMB
  26. LMT: http://studio-5.financialcontent.com/investplace/quote?Symbol=LMT
  27. CTXS: http://studio-5.financialcontent.com/investplace/quote?Symbol=CTXS
  28. P: http://studio-5.financialcontent.com/investplace/quote?Symbol=P
  29. BKS: http://studio-5.financialcontent.com/investplace/quote?Symbol=BKS
  30. R: http://studio-5.financialcontent.com/investplace/quote?Symbol=R
  31. SVU: http://studio-5.financialcontent.com/investplace/quote?Symbol=SVU
  32. (Read more here: http://investorplace.com/2012/10/be-afraid-be-very-afraid-of-supervalus-stock-rise-svu-bac-jpm-spls-bby-dltr/
  33. LEAP: http://studio-5.financialcontent.com/investplace/quote?Symbol=LEAP
  34. ACI: http://studio-5.financialcontent.com/investplace/quote?Symbol=ACI

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