While you were sleeping: McDonald’s disappoints

While you were sleeping: McDonald’s disappoints

July 27 (BusinessDesk) - Wall Street was mixed amid disappointing results from McDonald’s while Federal Reserve policy makers began their two-day policy meeting.

Investors are keen to get a sense of the Federal Open Market Committee’s take on the outlook for US interest rates and will scrutinise a statement set to be released after its meeting on Wednesday.

"The real thing I'm going to be looking for is, is there a tip of the hat to a potential rate increase in September?" Brad McMillan, chief investment officer at Commonwealth Financial Network, told Reuters.

Stocks were mixed. In 2.55pm trading in New York, the Dow Jones Industrial Average fell 0.3 percent. The Nasdaq Composite Index rose 0.2 percent. In 2.40pm trading, the Standard & Poor’s 500 Index slipped 0.1 percent.

Declines in shares of McDonald’s and those of Verizon Communications, down 4.5 percent and 1.9 percent respectively, led the Dow lower. Bucking the trend were shares of Caterpillar and those of United Technologies, trading 4.4 percent and 2.6 percent higher respectively.

Shares of McDonald’s slid after the company posted sales growth that fell short of expectations.

“The overall industry got weaker, and clearly McDonald’s felt some of that,” Peter Saleh, an analyst at BTIG in New York, told Bloomberg. “It was not a great quarter, especially on the US side.”

Verizon’s stock also fell on disappointing results, in particular in its rate of wireless subscriber growth. Verizon on Monday said it agreed to buy Yahoo for US$4.8 billion in cash.

“Yahoo, I would say, is a small acquisition for a company of our size but it’s a strategic acquisition for us,” Verizon’s Chief Finance Officier Fran Shammo told Bloomberg on Tuesday. “It brings viewers, and more viewers bring more advertising scale. Facebook and Google are the giants but in a market that will be US$180 billion in 2020, it doesn’t take much share to make a big difference.”

Apple is scheduled to report results after the close of trading. Its stock traded 0.6 percent weaker as of 2.57pm in New York.

Shares of DuPont gained after the company posted better-than-expected quarterly earnings as it slashed costs in preparation for its merger with Dow Chemicals before the end of the year.

"Cost savings, mix enrichment from new technologies and lower product costs contributed to the margin expansion,” Breen said in a statement. “Continued progress on our cost savings program keeps us on track to reach US$1 billion on a run-rate basis by year-end.”

DuPont shares traded 0.6 percent higher as of 1.30pm in New York.

Weighing on the mood was a further drop in oil, pushing US crude to fresh three-month lows.

“Our shift to a bearish stance that was initiated more than three weeks ago is currently being fortified by fresh lows across the energy spectrum that are reflecting a major speculative exit off of the long side,” Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates, told Reuters.

“We still see a gradual and orderly price decline going forward well into next month, with WTI values falling at an average weekly pace of around US$1.25 a barrel,” Ritterbusch noted.

Europe’s Stoxx 600 Index finished the session with an increase of 0.1 percent from the previous close. The UK’s FTSE 100 index and France’s CAC 40 index each rose 0.2 percent, while Germany’s DAX index climbed 0.5 percent.

Meanwhile, Martin Weale, an independent member of the Bank of England’s Monetary Policy Committee, told the Financial Times that he has changed his mind after a series of negative business surveys and now favours an immediate stimulus for the UK economy.

(BusinessDesk)

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