US stocks slip ahead of earnings season kickoff

US stocks slip ahead of earnings season kickoff


U.S. stocks fell Tuesday as traders awaited the start of the corporate earnings season.


The Dow Jones industrial average was down 78 points at 13,306 as of 12:40 p.m. Eastern time. The Standard & Poor's 500 index fell nine to 1,453. The Nasdaq composite index fell 20 to 3,078.


Aluminum maker Alcoa reports its fourth-quarter financial results after the market closes, marking the unofficial kickoff to weeks of earnings announcements from U.S. companies. Analysts surveyed by FactSet expect Alcoa to earn 6 cents per share, after losing 18 cents per share in the same quarter a year earlier. Alcoa is traditionally the first of the 30 companies in the Dow average to report earnings.


Market-watchers expect the quarter's results could include many surprises because of events like Superstorm Sandy, the presidential election, and the narrowly avoided tax increases and spending cuts known collectively as the "fiscal cliff."


"Earnings is going to be the big driver for the next couple of weeks, and we're just sitting around waiting for it to begin," said Kim Caughey Forrest, vice president and senior analyst at Fort Pitt Capital Group, an investment management firm.


The European debt crisis continued to cast a pall over the market. Unemployment in the 17 countries that use the euro hit a new high, leading the European Union to warn about the risk of fraying social welfare systems in southern Europe.


Trading has been cautious in the week since Congress and the White House struck a deal to maintain lower tax rates and postpone sweeping cuts in government spending. Enthusiasm about the compromise pushed the Dow up 300 points last Wednesday, its biggest gain since December 2011.


In corporate news:


- Agriculture products giant Monsanto jumped 3 per cent after saying its profit nearly tripled in the first fiscal quarter, helped by strong seed sales in Latin America. Monsanto raised its earnings guidance for the year. The stock rose $2.62 to $98.56.


- Video game seller GameStop lost 6 per cent after reporting weak holiday-season sales and cutting its revenue guidance. Shares dropped $1.41 to $23.34.


- Yum Brands, operator of the KFC and Taco Bell fast food chains, dropped 5 per cent after saying a key sales metric in China fell more than expected in the fourth quarter. The decline was related to problems at two of its small chicken suppliers; nearly half of the company's revenue came from China in 2011. The stock fell $3.12 to $64.77.


- In Korea, electronics giant Samsung said it expects record earnings for the fourth quarter as shoppers continue to embrace its smartphones and tablets. But there were signs its momentum is slowing, and the company's stock closed down 1.3 per cent in Seoul.


Story first published on: January 08, 2013 23:28 (IST)

Tags: US stock market, Wall Street, Dow Jones industrial average, Nasdaq Composite Index, S&P 500

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