Profits Pull at the Dow — Wednesday’s IP Market Recap

by Alyssa Oursler | October 10, 2012 4:56 pm

IPMarketRecap Profits Pull at the Dow    Wednesday's IP Market Recap[1]The Federal Reserve came out with some decent news on Wednesday, saying in its Beige Book business survey that the U.S. economy was growing “modestly.” Consumer spending remained flat since the last report, but housing and auto sales made clear improvements.

Still, investors weren’t all that impressed. Concerns about the global economy and a not-so-great start to the third-quarter earnings season overshadowed the slight optimism.

The markets ended in the red for the fourth straight day, with the Nasdaq falling 0.43% to end at 3,051.78 and the S&P 500 dropping 0.62% to 1,432.56. The Dow fared the worst, losing 0.95% to end at 13,444.97.

The Dow’s drop came with the help of struggling components Alcoa (NYSE:AA[2]) and Chevron (NYSE:CVX[3]). The former slumped just under 5% after yesterday’s warning that aluminum demand was not expected to improve[4], while Chevron, the second-largest American oil company, dipped around 4% after warning that its Q3 profits[5] would be much lower than the previous quarter.

Engine manufacturer Cummins (NYSE:CMI[6]) tossed in its share of bad news by cutting its profit forecast[7] for the year and announcing plans to lay off workers, sending shares down just over 3%.

Around a month ago, FedEx (NYSE:FDX[8]) also lowered its profit forecast, warning of a slow global economy. Today, though, shares got a 5% boost as the company announced plans to sharply reduce costs at its underperforming divisions.

The second official day came with some good news on the earnings front. Discount retail giant Costco (NASDAQ:COST[9]) topped analysts estimates[10] and recorded strong same-store sales growth in the U.S. and abroad. Yum! Brands (NYSE:YUM[11]) also rode yesterday evening’s solid earnings report[12] to the tune of 8% gains.

Also Wednesday, high-end jeans company True Religion (NASDAQ:TRLG[13]) saw shares soar today on the news that it is considering a sale in the wake of its dwindling stock value and profits. TRLG shares climbed more than 22%.

Barnes & Noble (NYSE:BKS[14]) also jumped 8% after announcing that pre-orders for the Nook HD are at record levels. The tablet still faces tough competition from rivals Amazon (NASDAQ:AMZN[15]) and Apple (NASDAQ:AAPL[16]), though.

Finally, in the M&A world, private equity firm Bain Capital announced that it will pay $1.6 billion to acquire Apex Tool Group[17] from Danaher (NYSE:DHR[18]) and Cooper Industries (NYSE:CBE[19]), while the proposed merger between European aerospace consortium EADS (PINK:EADSF[20]) and the United Kingdom’s BAE Systems (PINK:BAESY[21]) was called off[22].

Three Up

Three Down

Alyssa Oursler is an Editorial Assistant at InvestorPlace.com. As of this writing, she did not hold a position in any of the aforementioned securities.

Endnotes:
  1. [Image]: http://www.investorplace.com/hot-topics/investorplace-market-recap/
  2. AA: http://studio-5.financialcontent.com/investplace/quote?Symbol=AA
  3. CVX: http://studio-5.financialcontent.com/investplace/quote?Symbol=CVX
  4. not expected to improve: http://slant.investorplace.com/2012/10/alcoa-earnings-aa-stock-expectations/
  5. after warning that its Q3 profits: http://investorplace.com/2012/10/chevron-warns-on-q3-citing-isaac-and-refinery-fire/
  6. CMI: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMI
  7. cutting its profit forecast: http://investorplace.com/2012/10/cummins-trims-guidance-plans-job-cuts/
  8. FDX: http://studio-5.financialcontent.com/investplace/quote?Symbol=FDX
  9. COST: http://studio-5.financialcontent.com/investplace/quote?Symbol=COST
  10. topped analysts estimates: http://investorplace.com/2012/10/should-i-buy-costco-3-pros-3-cons/
  11. YUM: http://studio-5.financialcontent.com/investplace/quote?Symbol=YUM
  12. yesterday evening’s solid earnings report: http://investorplace.com/2012/10/yum-brands-shares-jump-on-3q-earnings-growth/
  13. TRLG: http://studio-5.financialcontent.com/investplace/quote?Symbol=TRLG
  14. BKS: http://studio-5.financialcontent.com/investplace/quote?Symbol=BKS
  15. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  16. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  17. to acquire Apex Tool Group: http://investorplace.com/2012/10/bain-capital-to-buy-maker-of-craftsman-tools-for-1-6b/
  18. DHR: http://studio-5.financialcontent.com/investplace/quote?Symbol=DHR
  19. CBE: http://studio-5.financialcontent.com/investplace/quote?Symbol=CBE
  20. EADSF: http://studio-5.financialcontent.com/investplace/quote?Symbol=EADSF
  21. BAESY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BAESY
  22. was called off: http://investorplace.com/2012/10/ding-dong-the-bae-eads-deal-is-dead/
  23. AUQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=AUQ
  24. CLNT: http://studio-5.financialcontent.com/investplace/quote?Symbol=CLNT
  25. AFFY: http://studio-5.financialcontent.com/investplace/quote?Symbol=AFFY
  26. ACW: http://studio-5.financialcontent.com/investplace/quote?Symbol=ACW
  27. FOE: http://studio-5.financialcontent.com/investplace/quote?Symbol=FOE
  28. YELP: http://studio-5.financialcontent.com/investplace/quote?Symbol=YELP

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