Stocks Slide Amid Debt Talks; Techs Gain
Stocks dipped Tuesday as investors continued to monitor the ongoing debt talks in Washington and after a handful of mixed economic news.
The Dow Jones Industrial Average tumbled, led by 3M and Boeing , after closing lower in the previous sessionamid ongoing worries over the debt talks.
The S&P 500 and the tech-heavy Nasdaq were trading mixed. The CBOE Volatility Index, widely considered the best gauge of fear in the market, gained above 20.
Industrials and materials were the biggest laggards among the key S&P sectors, while techs were higher.
“Earnings and economic data are taking a backseat to headlines again,” said Mark Lehmann, president of JMP Securities. “[The debt talks] are very worry worrisome economically and politically…but it’s going to be less apocalyptic than what some people believe.”
President Obama urged a compromise to raise the debt limitand warned that the American people could not become “collateral damage” to Washington’s politics.
In a televised address aimed at rallying public support for a package proposed by Democrats, Obama warned that failure to increase the U.S. borrowing limit would severely hurt the nation.
After the Aug. 2 deadline, Lehmann expects stocks to continue a “see-saw” pattern through year-end as markets struggle to juggle earnings, IPOs and ongoing weakness in the housing and job fronts.
On the earnings front, Ford Motor was flat even after the automaker topped earnings estimates, thanks to higher prices and improved sales in North America.
However, 3M slipped after the Dow component reported higher earnings, but said Japan's March earthquake reduced sales and profit margins. Meanwhile, UPS also edged lower after the package delivery company only narrowly beat profit estimates.
Meanwhile, AK Steel plunged almost 10 percent after the steelmaker said it expects a sharp decline in profit, due to weakening steel prices and higher material costs. Earlier this week, rival U.S. Steel also said it forecasts lower profit ahead.
And BP reported earnings below expectations. CEO Bob Dudley told CNBC that this year is one in which BP will consolidate and get its strength back.
Amazon.com and Electronic Arts are scheduled to report earnings after the closing bell.
Meanwhile, RadioShack soared after the electronics retailer disconnected an unprofitable partnership with T-Mobileand replaced it with Verizon Wireless . Verizon will start providing postpaid and prepaid wireless products and services in more than 4,300 RadioShack stores starting Sept. 15.
A handful of companies raise their price targets on Broadcom and Baidu after both tech firms posted earnings that beat estimates.
On the economic front, U.S. single-family home prices were unchanged in May, the first time in nearly a year they have not fallen on a monthly basis, though prices were still down compared to a year earlier.
The S&P/Case Shiller home price index of home prices in 20 metropolitan areas held steady on a seasonally adjusted basis and in line with economists' expectations, according to a Reuters poll.
On the housing front, new home sales fell1 percent to a seasonally adjusted 312,000-unit annual rate in June, but a sharp rise in prices and declining supply suggested the market for new houses was starting to stabilize, according to the Commerce Department. Economists had expected sales at a 320,000-unit rate, according to a Reuters poll.
Meanwhile, consumer confidence gained slightly to 59.5 in July from a downwardly revised 57.6 in the prior month, according to the Conference Board. Economists had expected a reading of 56.0, according to a Reuters poll.
At least eleven companies are scheduled to start trading this week, marking the biggest IPO week since November 2007. Among notable names, Dunkin' Brands plans to sell 22.3 million shares at a price range of $16 to $18 and will trade under the ticker "DNKN."
Meanwhile, U.S. specialty finance company Orchid Island Capital has postponed its IPO due to market conditions.
On Tap This Week:
TUESDAY: 2-yr note auction; Earnings from Amazon.com, Electronic Arts
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction, Beige Book; Earnings from Boeing, ConocoPhillips, Aetna, AutoNation, Delta, Dow Chemical, Aflac, Symantec, Visa, WholeFoods
THURSDAY: Weekly jobless claims, pending home sales, Kansas City Fed survey, Richmond Fed Lacker speaks, 7-yr note auction, San Francisco Fed Williams speaks, money supply; Earnings from AstraZeneca, Credit Suisse, DuPont, ExxonMobil, Royal Dutch Shell, Sanofi, Bristol-Myers Squibb, DR Horton, Kellogg, Motorola Solutions, Sprint, Time Warner Cable, Chesapeake Energy, MetLife, Motorola Mobility, Starbucks
FRIDAY: Employment cost index, GDP, Chicago PMI, consumer sentiment, farm prices; Earnings from Chevron, Merck
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