U.S. News

Earnings fail to lift US stocks as economic growth slows

Traders gather at the post that handles Allergan on the floor of the New York Stock Exchange,Thursday, Oct. 29, 2015. Allergan, which makes Botox, jumped 8 percent after saying it has held talks with Pfizer about a sale. (AP Photo/Richard Drew)

Traders gather at the post that handles Allergan on the floor of the New York Stock Exchange,Thursday, Oct. 29, 2015. Allergan, which makes Botox, jumped 8 percent after saying it has held talks with Pfizer about a sale. (AP Photo/Richard Drew)

NEW YORK (AP) — Stocks slipped Thursday after the U.S. said economic growth slowed more than expected in the summer.

A mixed batch of third-quarter earnings reports didn’t inspire investors. Companies including restaurant chain Buffalo Wild Wings and camera maker GoPro plunged after releasing weak results.

The market was lower all day after the Commerce Department said the economy cooled off in the summer as businesses cut production and drew down their inventories. The department estimated that gross domestic product grew 1.5 percent, a bit less than analysts had forecast.

RBS senior economist Kevin Cummins said the report isn’t a major warning sign. In his view, consumers are spending more money because gas prices have tumbled, and the labor market is doing well even though fewer people are in the workforce than in years past. While jobs reports for August and September showed reduced growth, Cummins expects to see better results in October.

“The domestic economy is in pretty healthy shape right now,” Cummins said.

The Dow Jones industrial average was down 23.72 points, or 0.1 percent, to 17,755.80. The Standard & Poor’s 500 index dipped 0.94 point to 2,089.41. The Nasdaq composite sank 21.42 points, or 0.4 percent, to 5,074.27.

Those little losses weren’t enough to undo the gains stocks made in the last hour of trading on Wednesday, after the Federal Reserve voiced some confidence in the economy by saying it might raise interest rates in December.

U.S. government bond prices kept falling, pushing yields higher as investors anticipated that U.S. interest rates could rise. The yield on the 10-year Treasury note rose to 2.18 percent from 2.10 percent late Wednesday.

The higher bond yields pulled buyers away from income-producing investments. Utility stocks in the S&P 500 index slid 0.6 percent, far more than the rest of the market.

Several companies dropped after releasing their reports. Buffalo Wild Wings skidded $31.95, or 17.3 percent, to $152.45 after the restaurant chain’s profit and sales fell short of expectations. Computer networking company F5 Networks dropped after reporting disappointing fourth-quarter revenue and first-quarter projections. The stock lost $11.26, or 9.3 percent, to $110.08.

While some companies have gotten major bumps after reporting good results, particularly in the tech sector, this earnings season hasn’t been great so far. Most of the companies on the S&P 500 have now disclosed their third-quarter earnings, and S&P Capital IQ says 52 percent of those have reported lower-than-expected revenue. Per-share profits are also down compared to last year.

GoPro slumped $4.59, or 15.2 percent, to $25.62 after the wearable camera maker reported disappointing results for its most recent quarter. It was the lowest closing price for GoPro shares, which began trading in 2014 and have lost more than half their value since mid-August.

Deutsche Bank said it lost about $6.6 billion in the third quarter. The company says it will sell businesses that employ about 20,000 people and eliminate 15,000 other jobs in an effort to improve profitability. It also won’t pay a dividend this year or next. The stock sank $2.42, or 8 percent, to $27.89.

There were some big gainers to be found, though. Hanesbrands rose after the maker of underwear, socks and t-shirts announced strong third-quarter results and raised its profit estimate for the year. The stock gained $4.05, or 14.7 percent, to $31.65.

The latest company to surge on talks of a possible sale was Allergan, which makes Botox. The Irish drugmaker jumped 6 percent after Allergan said it is in preliminary talks with Pfizer about a sale, which could become the largest deal in the history of the pharmaceutical industry. Allergan jumped $18.17 to $305.37, which put its market value at about $120 billion.

Pfizer makes the pain and fibromyalgia treatment Lyrica, erectile dysfunction drug Viagra, and Prevnar 13, a vaccine against pneumonia and ear and other infections. It’s the second-largest drug company in the world and bought competitor Hospira for $15 billion last month.

Just last year Pfizer failed to complete a similarly sized deal: it tried to buy competitor AstraZeneca for $119 billion, but the Anglo-Dutch company rejected the offer.

U.S. crude added 12 cents to $46.06 a barrel in New York. Brent crude, which is used to price international oils, lost 25 cents to $48.80 a barrel in London. Wholesale gasoline was unchanged at $1.350 a gallon in New York, heating oil fell less than one cent to $1.475 a gallon and natural gas slid 4.1 cents to $2.257 per 1,000 cubic feet.

The price of gold fell $28.80, or 2.4 percent, to $1,147.30 an ounce and silver declined 74 cents, or 4.6 percent, to $15.55 an ounce. Copper fell four cents, or 1.8 percent, to $2.32 a pound.

The dollar slipped to 121.13 yen from 121.23 yen. The euro rose to $1.0975 from $1.0909.


This story has been updated to clarify that Deutsche Bank will sell divisions with 20,000 employees and cut 15,000 jobs.


Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.