US stocks mostly fell yesterday as energy shares sold off on lower oil prices, and as the earnings season onset was clouded by concern company outlooks may fall short of expectations.
Worries that increased raw material costs and the effects from Japan’s earthquake may affect coming quarters will put companies’ forward-looking statements under extra scrutiny.
Aluminum maker Alcoa, a Dow component, launched the earnings season with the release of results after the market’s close.
“Companies are going to be trying to dampen expectations for the second quarter,” said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates. “The market focus is more internal as to whether it's gone up too fast.”
Energy shares fell as US crude futures slid on profit-taking. Occidental Petroleum fell 3.2 per cent to $100.42 while the S&P energy index fell 1.9 per cent.
Profits for S&P 500 companies are seen rising 11.4 per cent from a year ago, according to data, but much of that may be priced into shares. The S&P 500 is up over five per cent this year.
Optimism over earnings contributed to recent gains, despite turmoil in oil-producing regions and the disasters in Japan. Despite the S&P 500’s gains this year, light trading volume has prompted questions about the strength of the rally.
The Dow Jones industrial average rose 1.06 points, or 0.01 per cent, at 12,381.11. The Standard & Poor’s 500 Index fell 3.71 points, or 0.28 per cent, at 1,324.46. The Nasdaq Composite Index lost 8.91 points, or 0.32 per cent, at 2,771.51.
US crude oil futures ended 2.5 per cent lower as investors heeded a recommendation from Goldman Sachs that they take profits after the recent rally.
Alcoa shares slid 0.8 per cent to $17.77 after rising earlier. The company was seen posting growth in both earnings and revenue. JPMorgan Chase and Google are on tap to report later in the week.
In corporate news, Tenet Healthcare Corp said it has sued its suitor, Community Health Systems, claiming the rival hospital operator admitted patients for unneeded stays to overbill insurers, including Medicare.
Shares of Tenet sank 14.7 per cent to $6.44 while Community slumped 36 per cent to $25.89.
NYSE shares fell 2.9 per cent to $37.59 while Nasdaq OMX fell 1.5 per cent to $28.03 and ICE was unchanged at $120.55.