Despite fantabulous growth data from Google, several Dow stocks have cast a pall on the markets today, with the Dow off ~ 200 points as I type this. 3M, Honeywell and Caterpillar are leading the charge lower.
I have to find the source, but S&P has also reported that this will be the 1st quarter in 5 years that will see negative year-over-year earnings growth.
As we noted Tuesday morning, the option expiry gamma is also adding downwards pressure to indices, asn options traders hedge their exposure. (These moves typically reverse the next day).
It’s an earnings-driven breakdown on the Dow Jones Industrial Average today, as three of the four components that reported prior to today’s opening were responsible for a good chunk of the losses on the 30-stock average in the morning . . .
Among those issuing clouded guidance was industrial equipment giant Caterpillar, which was down 3.5% % after the company missed expectations and lowered forthcoming guidance. Fellow components Honeywell and 3M are worse, falling 4.6% and 6.5%, respectively, as the latter said it would be slowing its pace of stock buybacks.
Combined, the three stocks account for 96 points of negative drag on the Dow, with 3M’s massive drop making up 50 points of that fall-off. The lone earnings reporter to buck the trend was McDonald’s, which was off fractionally, contributing little to the Dow’s move.
I’m ducking out to meet Prier du Plessis for lunch –be back soon . . .
The Dow’s Three Stooges
Marketbeat, October 19, 2007, 10:55 am