Markets ended lower on Tuesday after shares of GE declined for the second straight day. Moreover, oil prices declined after International Energy Agency slashed its global crude-demand forecasts. This factor also weighed on the broader markets. Further, lingering tax-reform woes also dampened investor sentiment. Meanwhile, Elizabeth Warren commented that the Republican tax plan would eventually lead to an economic slowdown.
The Dow Jones Industrial Average (DJIA) decreased 0.1%, to close at 23,409. The S&P 500 Index (INX) declined 0.2% to close at 2,578.87. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,737.87, declining 0.3%. Decliners outnumbered advancers on the NYSE by 1,775 to 1,054. On Nasdaq, declining issues outnumbered the advancing ones by 1,736 to 1,068. The CBOE VIX increased 0.8% to close at 11.59.
General Electric and Tax Woes Weigh On the Markets
Shares of General Electric (GE - Free Report) declined for the second straight day to hit its lowest levels since 2011. Shares of GE declined 5.9% on Tuesday, losing almost 12% in two days. On Monday, the company said that for the next year, the electric giant expects EPS in the range of $1.00-$1.07, which is significantly lower than the 2017 guidance of $1.05-$1.10 a share. The company also reduced its dividend by 50% in a bid to focus more on health care, aviation and energy business segments. The decline in the shares of GE weighed on the broader markets.
Moreover, tax woes continued to worry the investors. Late last week, a version of the tax plan was released by the Senate Finance Committee. The Senate version differed from that of the House panel's in several ways. Unlike the House Republicans’ tax proposals which focused on reducing corporate tax rate from 35% to 20%, the Senate version supports a similar tax cut only by 2019. Worries over a possible delay in tax cut plans dampened investor sentiment and brought about broad based losses for the markets.
How Did Benchmarks Perform?
The Dow shed 30.23 points to end in the negative territory. This marked the blue-chip index’s third decline out of the last four sessions. Earlier in the session the Dow was down by as much as 170 points. Such a dismal run can partly be attributed to the decline in GE’s shares. Further, shares of Goldman Sachs Group (GS - Free Report) , Apple (AAPL - Free Report) , Walt Disney (DIS - Free Report) and DowDuPont (DWDP - Free Report) were all down 0.1%, 1.5%, 1.5% and 2.2%, respectively. Meanwhile, the Nasdaq lost 19.72 points to also end in the red. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Further, the S&P 500 closed almost 6 points lower, with eight of its 11major sectors ending in losses. The S&P 500 has also finished three of the past four sessions in the red. Decliners were led by energy shares, with the Energy Select Sector SPDR ETF (XLE) dwindling 1.6%. Energy shares tanked following the release of a report by International Energy Agency in which the global body slashed global crude-demand forecasts and stated that U.S. shale-oil production will witness a boom in the near future. Such comments led to a decline in oil prices.
Political Drama Keeps Investors Confused
Speaking at a Center for American Progress Action Fund event, Democrat Senator from Massachusetts, Elizabeth Warren warned of a possible economic slowdown on Tuesday if the Republican tax plan is implemented. She reasoned that such a plan would squeeze the tax revenues for infrastructure and retard economic growth.
She also stated that the terms of the plan would actually lead to small business owners subsidizing big companies which in turn would lead to a crunch in tax revenues. Such comments from her come at a time when the investors are already battling tax-reform worries.
Meanwhile, reports also surfaced from Wall Street Journal that the White House was considering Mohamed El-Erian, chief economic advisor at Allianz as a possible candidate for the second best job at tje Federal Reserve. Trump has already nominated Jerome Powell to fill in Yellen’s shoes post her retirement in February next year. (Read More)
On the economic data front, the reading for PPI for October came in at 0.4%, in line with the previous month’s figure. The consensus estimate for the same was 0.1%. Meanwhile, Core PPI for October came in at 0.3%, in line with the previous month figure. The consensus estimate for the same was 0.2%.
Stocks That Made Headlines
Cheniere Energy Q3 Earnings Lag, Sales Top Estimates
Cheniere Energy, Inc. (LNG - Free Report) reported mixed third-quarter 2017 results wherein the company incurred wider-than-expected loss, while revenues topped the Zacks Consensus Estimate. (Read More)
Alaska Air Group Subsidiary to Cease Havana Operations
Alaska Air Group Inc.’s (ALK - Free Report) wholly-owned subsidiary, Alaska Airlines, has announced that it will discontinue service between Los Angeles and Havana, Cuba, primarily due to soft demand. (Read More)
DICK'S Sporting Falls on Soft FY18 View, Q3 Earnings Top
DICK'S Sporting Goods, Inc. (DKS - Free Report) reported a solid third-quarter fiscal 2017, with both earnings and sales surpassing estimates. (Read More)
Eni Inks Exploration Agreement for Block 52, Offshore Oman
Eni SpA (E - Free Report) has inked an Exploration and Production Sharing Agreement (EPSA) with Oman Oil Company Exploration and Production ("OOCEP"), a subsidiary of state company Oman Oil Company SAOC ("OOC"), relating to Block 52. (Read More)
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