DFS Discover Financial Services

By Caitlin Ostroff and Michael Wursthorn 

The Dow Jones Industrial Average slipped Wednesday after lackluster earnings from Caterpillar and Boeing pulled the blue-chip index lower.

Both companies reported earnings that fell short of analysts' expectations, sending shares of Caterpillar and Boeing lower and dashing the run of strong profit reports that had supported major indexes' gains earlier in the week.

The losses pulled the price-weighted Dow industrials into the red, while the S&P 500 and Nasdaq Composite bounced around the flat line. Broader indexes got support from more upbeat earnings reports from companies like United Parcel Service and Discover Financial Services.

The Dow Jones Industrial Average fell 134 points, or 0.5%, to 27216, while the S&P 500 and Nasdaq Composite were mostly flat.

Most companies that have reported quarterly earnings have beaten analysts' expectations. Of the 138 S&P 500 companies to release results, 78% have exceeded analysts' projections, according to FactSet.

But Wednesday's disappointing reports reminded investors that many companies, especially multinationals, are coping with a challenging economic environment.

Earnings are in a "slight recession" for the next two quarters, said Sebastien Galy, macro strategist at Nordea Asset Management. Earnings will likely rebound next year, he added, leaving markets vulnerable to some volatility in the meantime.

Shares of Caterpillar fell 4.1% after it reported lower sales in China and higher costs due to tariffs and labor. The Deerfield, Ill., company said the tough economic climate isn't expected to abate, guiding its full-year profit to the lower end of its forecast.

Boeing fell about 2% after it said it lost $2.94 billion in the June quarter, its biggest loss ever, due to the grounding and slowed production of the 737 MAX jetliner.

Some big technology companies also struggled following the Justice Department's announcement that it is probing for antitrust violations. Shares of Facebook, Apple, Amazon.com and Google parent Alphabet were all lower in recent trading, although all four had recovered some of their losses from earlier in the session.

Broader stock indexes fared better due to upbeat earnings from a handful of other companies. UPS jumped 8.4%, helping to pull the S&P 500 higher, after r eporting earnings and revenue that topped analysts' expectations.

Discover Financial Services added 7.3% after it beat quarterly revenue targets, while Edward Lifesciences soared 10% after reporting-better-than-expected second-quarter results late Tuesday.

In Europe, stocks edged slightly higher. The Stoxx Europe 600 added less than 0.1%, as tech and auto makers in the region posted gains. Shares in Asia mostly rose, with the Shanghai Composite and Japan's Nikkei adding 0.8% and 0.4%, respectively.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

July 24, 2019 11:44 ET (15:44 GMT)

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