News Column

Weak Earnings Put a Drag on Stocks

January 16, 2014

Ken Sweet, AP Markets Writer

worried traders
Stocks were down Thursday after a record high the day before (AP)

NEW YORK (AP) After hitting a record high the day before, stocks were mostly lower in morning trading Thursday as investors reacted to disappointing results from Best Buy, Citigroup and the railroad operator CSX.

KEEPING SCORE: The Standard & Poor's 500 index was down four points, or 0.2 percent, at 1,844 in the first hour of trading. The Dow Jones industrial average lost 57 points, or 0.3 percent, to 16,424. The Nasdaq composite edged up tw0 points, or 0.1 percent, to 4,217

BEST BUY: The electronics store chain plunged $10, or 27 percent, to $27.39, by far the biggest drop in the S&P 500 index. Best Buy said its sales fell 0.8 percent for the nine weeks ended Jan. 4, while analysts had expected growth. The holiday shopping period is the most important time of the year for retailers, where chains like Best Buy can make up to 40 percent of their annual sales. Best Buy was one of the biggest gainers in the S&P 500 in 2013, up 236 percent.

BANKS: Goldman Sachs and Citigroup reported earnings before the opening bell. Citigroup's results fell short of analysts' expectations due to weakness in its bond and mortgage businesses, sending its stock down $2.03, or 4 percent, to $52.99. Goldman Sachs also reported a drop in fourth-quarter profit to due problems in its mortgages and bond trading division. However, Goldman's earnings beat analysts' expectations. Goldman lost $2.37, or 1 percent, to $176.30.

TRANSPORTATION: The Dow Jones Transportation Average, also known as the Dow Transports, was down nearly 1 percent in early trading. The railroad company CSX warned investors Thursday that it might be difficult to reach its own profit targets over the next two years because of ongoing weak demand for coal. The news pushed CSX down $2.05, or 7 percent, to $27.55. Other railroad stocks including Union Pacific and Norfolk Southern were down as well.

JOBS: The number of Americans seeking unemployment benefits fell 2,000 last week to a seasonally adjusted 326,000, a sign that layoffs are weighing less on the job market and economic growth. The less volatile four-week average dropped 13,500 to 335,000.

PIZZA PARTY: CEC Entertainment, the parent company of the Chuck E. Cheese pizza parlor chain, was up 13 percent to $54.52. CEC agreed to be bought by the private equity firm Apollo Global Management for $950 million.

BONDS: Prices on U.S. government bonds rose slightly. The yield on the 10-year Treasury note, a benchmark for many kinds of loans including home mortgages, fell to 2.85 percent from 2.89 percent the day before.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Original headline: Weak earnings drag US stocks mostly lower

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Source: Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.