While you were sleeping: Wall Street slides
Aug 6 (BusinessDesk) - Wall Street dropped amid disappointing earnings from US companies including Motorola and increased concern about escalating tension in Ukraine.
In late afternoon trading in New York, the Dow Jones Industrial Average dropped 0.96 percent, the Standard & Poor’s 500 index retreated 1.12 percent, while the Nasdaq Composite Index fell 0.92 percent.
Slides in shares of Intel and Chevron, down 3.7 percent and 2.5 percent respectively, dragged the Dow lower. Shares of Exxon Mobil slumped 2.2 percent.
The recent declines have nearly wiped out the Dow’s gains so far this year, now just up 0.2 percent in 2014. The S&P 500 is still up 4.9 percent this year.
Some of the latest earnings were disappointing. Shares of Motorola sank 4.6 percent after the company posted quarterly results that failed to meet the mark.
Shares of Target slumped, last down 4.1 percent, after the company warned its second-quarter profit will fall short of its prediction. The retailer will announce its full second-quarter results on August 20.
“While the environment in both the US and Canada continues to be challenging, and results aren’t yet where they need to be, we are making progress in our efforts to drive US traffic and sales, improve our Canadian operations and advance Target’s digital transformation,” John Mulligan, interim CEO, said in a statement.
Meanwhile, another takeover battle was brewing. Dollar General is weighing a bid for Family Dollar Stores that would challenge Dollar Tree’s US$8.5 billion takeover of the discount retailer, Bloomberg News reported, citing people with knowledge of the matter.
Dollar General is working with an adviser to evaluate its options and knows that banks are willing to finance a counterbid, one of the people said, asking not to be identified discussing private information, according to Bloomberg.
Shares of Dollar General climbed 3.1 percent, shares of Family Dollar Stores gained 2.1 percent, while those of Dollar Tree dropped 2.5 percent.
The latest economic data were better than expected. An Institute for Supply Management report showed its non-manufacturing index climbed to 58.7 in July, up from 56 in June.
The data added weight to those believing the US Federal Reserve will have to start lifting its benchmark interest rate.
"The economy is normal, and a normal economy requires a normal interest rate, not a zero interest rate," Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told Reuters.
In Europe, the Stoxx 600 Index finished the day with a 0.3 percent increase from the previous close. The UK’s FTSE 100 Index gained 0.1 percent, while France’s CAC 40 and Germany’s DAX both rose 0.4 percent.
Here, stronger-than-expected corporate earnings bolstered sentiment, with Deutsche Post and Credit Agricole exceeding expectations.