US stocks fell in late morning trading yesterday as earnings from Facebook and Procter & Gamble disappointed investors and data showed that the economy expanded at a slower-than-expected pace in the second quarter.
Procter & Gamble’s 3.7 per cent fall dragged down the Dow, after the company reported its sixth straight quarter of lower sales.
Facebook shares fell 3.9 per cent after the social media company’s profit decreased, and weighed heavily on the S&P 500 and Nasdaq.
Gross domestic product expanded at a 2.3 per cent annual rate in the second quarter, below the 2.6 per cent rise economists had expected, even as the Federal Reserve left doors open for a possible rate hike in September.
The Fed has maintained near-zero interest rates for nearly a decade, saying it will raise rates only when it sees a sustained recovery in the economy.
“Earnings haven’t been great and there is much more slack in the economy than the market or the Fed thought while big concerns such as oil and China continue to persist,” said John Canally, investment strategist at LPL Financial.
“We are in a slow-growth environment and anything that knocks that down further is not a plus for the market.”
The US dollar continued to strengthen and was up 0.68 per cent near a weekly high of $97.63 against a basket of currencies as the Fed readies to raise rates this year.
USstocks closed stronger on Wednesday after the Fed statement. The S&P 500 has bounced about two per cent higher in the past two days following a near-three per cent drop over the preceding week that had been caused in part by a rout in China’s stock markets.
At 11.12am ET (15.12 GMT) the Dow Jones industrial average was down 66.34 points, or 0.37 per cent, at 17,685.05, the S&P 500 was down 8.72 points, or 0.41 per cent, at 2,099.85 and the Nasdaq Composite was down 23.00 points, or 0.45 per cent, at 5,088.73.
Seven of the 10 major S&P sectors were lower with the technology index’s 0.59 per cent fall leading the decliners.
More than halfway through the second-quarter earnings season, analysts expect overall earnings of S&P 500 companies to edge up 0.8 per cent and revenue to decline 3.9 per cent, according to Thomson Reuters data.
While earnings are expected to increase this quarter, valuations remain a concern.
The S&P 500 is trading near 16.9 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.
Companies scheduled to report during the day include Expedia, LinkedIn and Western Union after the close.
Whole Foods Market slumped 10.8 per cent to $36.41 after same-store sales growth cooled.
Skechers USA jumped 14.1 per cent to $146.42 as the sports shoe maker and retailer reported a better-than-expected rise in quarterly revenue.
Mondelez International rose 4.5 per cent to $45.07 after reporting results that beat expectations.
Declining issues outnumbered advancers on the NYSE by 1,628 to 1,187. On the Nasdaq, 1,463 issues fell and 1,050 advanced.