Stocks Move Lower on Earnings; Caterpillar Tumbles, Boeing Ascends

Dan Berman
Hot Stock Minute

Stocks moved lower today as earnings took center stage again on Wall Street. The drop followed four straight record-high sessions for the S&P 500. Yesterday the index closed above 1,750 for the first time after the delayed release of the September jobs report. Weaker-than-expected hiring suggests the Fed will not begin to taper its bond-buying program yet. On the economic front today, the Labor Department said September's import prices rose 0.2%. That figure was in line with estimates.

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Caterpillar (CAT) was knocked off its feet today, dropping 6% on its earnings. The maker of construction and mining equipment badly missed estimates for the quarter. Earnings fell 44% to $1.45 a share when estimates were for $1.66 a share. Revenues were nearly a billion below the consensus figure of $14.35-billion coming in at $13.42-billion. Caterpillar is pointing to declines in its mining gear business. It sees the weakness persisting and is therefore lowering its full-year guidance.

Boeing (BA) was among today's high fliers. The stock rose 5.4% on robust earnings which beat expectations. The plane-maker reported profits of $1.80 a share, 25-cents better than expectations. Revenue also topped the consensus at $22.1-billion versus $21.685-billion. Boeing cited strength in its commercial aircraft business saying it offset weakness in its defense division. The company also raised its earnings outlook for the year.

A trio of big pharma companies also reported today: Eli Lilly (LLY) came out with a healthy earnings beat. Profits came to $1.11 a share when estimates were for $1.04. Revenues were slightly above estimates at $5.77-billion versus $5.759-billion; Bristol-Myers Squibb (BMY) also beat estimates. The company made 46-cents a share, 2-cents better than expectations on revenues of $4.065-billion. Estimates had been for an even $4-billion. On the other side of the pond GlaxoSmithKline (GSK) reported its profits in pounds. The company says sales missed estimates, largely because an anti-corruption probe in China has hurt its business there.

Three tech stocks tumbled sharply on their earnings: Cree (CREE), Broadcom (BRCM) and Unisys (UIS). Cree which makes LED lights, fell 17% even though the company actually matched estimates of 39-cents a share. It was also just $1-million short on revenues which totaled $391-million, however, it issued a weak outlook.

Turning to Broadcom, dropped 2.8%. The company had a solid beat earning 76-cents a share when expectations were for 69-cents. But here as well the forecast was gloomy. Sales for the quarter were $2.15-billion beating estimates of $2.13-billion.

Unisys shares dropped 4% after reporting a surprise loss of 26-cents a share. The consensus had been for profits of 40-cents a share. Revenue was also well below estimates at $792-million when the consensus was for $854-million. Unisys had been down double-digits but then pared its losses.

Panera (PNRA) seems to have lost its freshness with shares dropping 5.7% on its earnings. Panera actually beat estimates for the quarter making $1.48 a share versus a consensus of $1.35. Revenue, however, was below expectations at $572.5-million when estimates had been for $584.78-million. Panera says sales overall rose for the quarter, but that's because the company increased menu prices. Traffic at the chain's bakery cafes was down for the period.

Netflix (NFLX) opened lower but wound-up posting a 2.4% gain for the day. The move higher followed an unusual day yesterday when the stock reversed early gains and dropped 9% after the CEO Reed Hastings warned that the stock's move higher seemed like euphoria. There was also the news that Carl Icahn sold half of his shares in Netflix. Check out this tweet: "Sold block of Netflix today. Wish to thank Reed Hastings, Ted Sarandos, Netflix team, and last but not least Kevin Spacey."

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