Lowered Earnings Expectations send DJIA, S&P 500, and NASDAQ Into the Tank

Michael Teague |

The shockingly dismal jobs report issued by the Department of Labor last week carried over into Monday’s trading session, exacerbating widespread expectations that the first earnings season of 2014 will a disappointing one, and sending stocks plummeting by the closing bell.

The Standard & Poor’s 500 index was off by 1.26 percent to 1,819.20, while the Dow Jones Industrial Average was off by 1.09 percent for a finish at 16,257.94. The NASDAQ took the hardest hit, tumbling 1.47 percent by the end of trading to 4,113.30.

On the S&P 500, big techs provided a significant amount of downward pressure, with Facebook (FB) , Microsoft (MSFT) , and Micron Technology (MU) all heading lower on the day’s heaviest trading. Big banks were also a drag on the benchmark index, however, as Bank of America (BAC) , Citigroup (C) , and Wells Fargo (WFC) off by a percent or more each.

On the upside, support came from Beam Inc. (BEAM) , as the iconic whiskey producer watched shares jump by 25 percent subsequent to the announcement of its acquisition by the popular Japanese distiller Suntory, a deal carrying a price tag of $16 billion including debt.

All of the Dow’s components were caught in the sell-off, with particularly heavy losses for Walt Disney Co. (DIS) and Nike Inc. (NKE) , with the lone exception being major drug manufacturer Merck & Co. Inc.’s (MRK) 6.50 percent gain after the FDA showed renewed interest in the company’s Vorapaxar cardiovascular treatment that had previously been all but written off as a failure.

On the NASDAQ, uber-trendy yoga apparel-maker Lululemon Athletica (LULU) was off by over 16 percent after the company slashed guidance ahead of the release of its balance sheet for the recently-ended quarter. Israeli kitchen gadget-maker SodaStream International (SODA) saw shares lower by 25 percent for the same reason.

Intercept Pharmaceuticals (ICPT) , meanwhile, pared back ever so slightly on the previous week’s heliotropic 560 percent leap, with the stock unloading a relatively insignificant 18 percent by the closing bell. Overall, healthcare stocks performed incredibly well despite the day’s frantic sell-off, with double-digit gains for Alnylam Pharmaceuticals (ALNY) , Galena Biopharma (GALE) , Cadence Pharmaceuticals (CADX) , and Sucampo Pharmaceuticals (SCMP) .

Natural gas futures slated for Feb. 14 delivery were rose over 6 percent to $4.30 on the day on expectations that the polar vortex will continue to engulf huge swathes of the US mainland in unusually cold temperatures over the coming weeks.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BAC Bank of America Corporation 14.49 -0.19 -1.29 63,276,523
C Citigroup Inc. 43.81 -0.27 -0.61 13,773,743
CMPRF Gentera Sab De Cv Ord 1.77 0.00 0.00 0
DIS Walt Disney Company (The) 95.95 0.04 0.04 8,263,966
FB Facebook Inc. 123.94 -1.06 -0.85 35,058,803
GALE Galena Biopharma Inc. 0.44 -0.03 -5.40 5,000,110
ICPT Intercept Pharmaceuticals Inc. 173.03 6.13 3.67 334,204
LULU lululemon athletica inc. 77.65 0.27 0.35 717,008
MRK Merck & Company Inc. (new) 58.66 0.23 0.39 8,491,237
MSFT Microsoft Corporation 56.68 0.47 0.84 30,558,718
MU Micron Technology Inc. 13.74 -0.07 -0.51 21,792,899
NKE Nike Inc. 55.50 0.05 0.09 6,353,444
SCMP Sucampo Pharmaceuticals Inc. 11.75 0.07 0.60 332,876
SODA SodaStream International Ltd. 24.05 0.22 0.92 267,881
WFC Wells Fargo & Company 47.97 -0.16 -0.33 13,111,673

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