While you were sleeping: Ford Motor drops

Friday 29th July 2016

Wall Street was mixed amid disappointing earnings from Ford Motor and better-than-expected results from Facebook.

Shares of Ford Motor sank, trading 9 percent weaker as of 2.41pm in New York, after the car maker posted disappointing results and warned that it “now sees risks challenging achieving guidance” for the full year.

“The US auto market is probably levelling out,” David Whiston, an analyst for Morningstar in Chicago, who rates Ford the equivalent of a buy, told Bloomberg. “The risk is, when does all that all come crashing down. I’m not worried about it being imminent.”

In 2.43pm trading in New York, the Dow Jones Industrial Average slipped 0.1 percent. The Nasdaq Composite Index added 0.3 percent. In 2.28pm trading, the Standard & Poor’s 500 Index gained 0.1 percent.

In the Dow, declines in shares of Boeing and those of Caterpillar, down 2 percent and 1.6 percent respectively, outweighed gains in shares of Home Depot and those of Apple, recently each up 1 percent.

Shares of Facebook climbed, trading 1.1 percent higher at US$124.75 as of 2.52pm in New York after rising as high as US$128.33 earlier in the session, as the company reported quarterly earnings that surpassed analysts’ estimates.

"While FB could be reaching a saturation point in more developed markets, we believe there (are) several levers to drive rev growth," Mizuho Securities analyst Neil Doshi said in a note, according to Reuters. Doshi raised his price target to US$150, from US$140, Reuters said.

There were fresh signs of a solid US jobs market. A Labor Department report showed that the number of people claiming unemployment benefits increased more than expected to 266,000 for the week ended July 22, a sign that more people are feeling optimistic enough to start looking for work again.

The data came a day after the Federal Open Market Committee said that the labour market had strengthened since their June policy meeting, adding that “on balance, payrolls and other labour market indicators point to some increase in labour utilisation in recent months”.

“Claims at this point are telling you that you’re really near full employment,” Brett Ryan, an economist at Deutsche Bank Securities in New York, told Bloomberg. “There’s no evidence that layoffs are picking up. The labour market’s chugging along.”

Former Fed Chairman Alan Greenspan is worried that bond prices have risen too high. Benchmark US 10-year note yields were at 1.5 percent in New York in early afternoon.

“We get very nervous when the stock price index goes to high p/e, we ought to be somewhat nervous when the bond rate does the same,” Green told Bloomberg in an interview.

Europe’s Stoxx 600 Index ended the day with a drop of 0.9 percent from the previous close. The UK’s FTSE 100 index fell 0.4 percent, as did Germany’s DAX index, while France’s CAC 40 index slid 0.6 percent.

A report showed euro-zone economic confidence unexpectedly improved in July.

BusinessDesk.co.nz

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