While you were sleeping: Boeing sends Dow lower
By Margreet Dietz
Oct. 26 (BusinessDesk) - Wall Street slid from record highs as shares of Boeing and AT&T declined following their latest earnings.
In 2.24pm trading in New York, the Dow Jones Industrial Average fell 0.46 percent, while the Nasdaq Composite Index slid 0.52 percent. In 2.08pm trading, the Standard & Poor’s 500 Index declined 0.46 percent.
The Dow fell as declines in shares of Boeing and those of General Electric, recently down 3.2 percent and 2.2 percent respectively, outweighed gains in shares of Nike and those of Visa, recently up 3.5 percent and 1.1 percent respectively.
Shares of Chipotle Mexican Grill also sank, plunging 15.1 percent as of 1.06pm trading in New York, after the fast-food restaurant chain posted disappointing quarterly results that raised fresh doubts about its ability to rebound from food safety scandals.
"Despite some sales lift from queso and pricing, we view this result and outlook as disappointing, particularly for those looking for a more meaningful recovery following multiple food safety events," Credit Suisse analyst Jason West wrote in a note to clients, CNBC reported.
Credit Suisse slashed its price target on Chipotle shares to US$275, from US$320, according to CNBC.
At least nine brokerages cut their price targets on Wednesday, including Canaccord Genuity analyst Lynne Collier, Reuters reported.
“We continue on the sidelines given our belief that a sales recovery will take longer than many investors expect as we maintain that competitive intrusion is the most significant long term issue for Chipotle,” Collier wrote in a note, according to Reuters.
And competition in the US fast-food industry is set to heat up even further. McDonald’s will launch a new value-priced menu nationally next year, offering items for US$1, US$2 and US$3, the company said on Tuesday, Bloomberg reported.
The rollout will provide a long-awaited replacement to the Dollar Menu, which was popular with customers but less so with McDonald’s franchisees. Almost 100 percent of franchisees have signed up to participate in the new value program, McDonald’s said, Bloomberg reported.
Shares of McDonald’s traded 0.3 percent weaker as 2.12 pm in New York.
Also weighing on sentiment were mixed messages from the Trump administration about potential limits for tax breaks on workers' 401(k) contributions.
“The 401k issue is causing some confusion because it is directly contradicting the President and the market doesn’t like confusion,” Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee, told Reuters.
In Europe, the Stoxx 600 Index finished the session with a 0.6 percent decline from the previous close. The UK’s FTSE 100 Index dropped 1.1 percent, while Germany’s DAX Index retreated 0.5 percent and France’s CAC 40 Index fell 0.4 percent.
Shares of GlaxoSmithKline dropped 5.5 percent. Chief Executive Officer Emma Walmsley said she expects Brexit to add to the UK drugmaker’s costs starting later this year, while she also said the company considers acquisition options including Pfizer’s consumer healthcare business, raising concern about dividend payments.
Meanwhile, Pfizer plans to kick off an auction process for its consumer healthcare business in November, paving the way for a potential $15 billion-plus sale of the headache pill to lip balm business, Reuters reported, citing sources close to the matter.