- POSTED: 30 Jul 2014 04:46
US stocks on Tuesday (July 29) finished lower after the United States and European Union broadened sanctions on Russia, overshadowing US economic data and earnings reports.
NEW YORK: US stocks on Tuesday (July 29) finished lower after the United States and European Union broadened sanctions on Russia, overshadowing US economic data and earnings reports.
The Dow Jones Industrial Average dropped 70.48 points (0.42 pe rcent) to 16,912.11.
The broad-based S&P 500 fell 8.96 points (0.45 per cent) to 1,969.95, while the tech-rich Nasdaq Composite Index gave up 2.21 points (0.05 per cent) at 4,442.70.
The EU, which had been more reluctant than the US to boost its sanctions against Russia, imposed new restrictions on the finance, defense and energy sectors to increase the economic cost to Russia for its intervention in Ukraine.
The US followed with new restrictions on Russia's energy sector, arms industry and financial institutions.
Jack Ablin, chief investment officer at BMO Private Bank, attributed Tuesday's drop in stocks entirely to the sanctions, which followed mixed corporate earnings reports.
"There's always economic blowback" from sanctions, he said. "Whenever trade is restrained in any way, that creates dislocations and distortions that are generally negative."
Dow component Pfizer finished 1.2 per cent lower after reporting adjusted earnings of 58 cents per share, a penny above analyst expectations. Analysts noted some of the drugmaker's most successful sellers during the quarter will suffer as key patents expire.
Fellow drugmaker Merck, also in the Dow, gained 1.1 per cent after earnings of 85 cents per share bested expectations by four cents. Better sales of diabetes medication Januvia/Janumet, anti-cholesterol drug Zetia/Vytorin and other medicines helped offset the effect of patent expirations.
UPS fell 3.7 per cent as the delivery company said full-year earnings would be US$4.90-US$5.00 per share, down from the April forecast of US$5.05-US$5.30 per share. The company said it was increasing spending to boost capacity for the November-December peak holiday season.
Wal-Mart Stores dropped 0.4 per cent after Goldman Sachs downgraded the giant retailer, concluding that the company's current investment campaign to bolster its presence online and in the small-store market, while "understandable," will harm earnings in the short run.
But Goldman upgraded Costco Wholesale in the same report, in part because of its strong international growth potential. Costco shares rose 1.5 per cent.
Bond prices rose. The yield on the 10-year US Treasury fell to 2.46 per cent from 2.49 per cent on Monday, while the 30-year dropped to 3.22 per cent from 3.26 per cent. Bond prices and yields move inversely.