NEW YORK-U.S. blue-chip stocks opened mostly lower Tuesday as a mixed earnings picture and a lack of progress on U.S. debt talks hurt investor sentiment.
The Dow Jones Industrial Average fell 69 points, or 0.6%, to 12523, led lower by 3M, which sank 4.2%. The blue-chip conglomerate reported sales growth at most of its businesses, but investors were disappointed with the company's rising operating expenses.
Earnings and economic data are taking a backseat to headlines again,” said Mark Lehmann, president of JMP Securities. “[The debt talks] are very worry worrisome economically and politically…but it’s going to be less apocalyptic than what some people believe.”
President Obama urged a compromise to raise the debt limit and warned that the American people could not become “collateral damage” to Washington’s politics.
In a televised address aimed at rallying public support for a package proposed by Democrats, Obama warned that failure to increase the U.S. borrowing limit would severely hurt the nation.
After the Aug. 2 deadline, Lehmann expects stocks to continue a “see-saw” pattern through year-end as markets struggle to juggle earnings, IPOs and ongoing weakness in the housing and job fronts.
On the earnings front, Ford Motor [F 12.971 -0.199 (-1.51%) ] was flat even after the automaker topped earnings estimates, thanks to higher prices and improved sales in North America.
However, 3M [MMM 90.60 -4.47 (-4.7%) ] slipped after the Dow component reported higher earnings, but said Japan's March earthquake reduced sales and profit margins. Meanwhile, UPS [UPS 70.90 -3.15 (-4.25%) ] also edged lower after the package delivery company only narrowly beat profit estimates.
Meanwhile, AK Steel [AKS 13.1499 -2.3701 (-15.27%) ] plunged almost 10 percent after the steelmaker said it expects a sharp decline in profit, due to weakening steel prices and higher material costs. Earlier this week, rival U.S. Steel [X 40.75 -3.54 (-7.99%) ] also said it forecasts lower profit ahead.
And BP [BP 46.26 -0.51 (-1.09%) ] reported earnings below expectations. CEO Bob Dudley told CNBC that this year is one in which BP will consolidate and get its strength back.
Amazon.com [AMZN 212.07 -1.42 (-0.67%) ] and Electronic Arts [ERTS 23.84 -0.23 (-0.96%) ] are scheduled to report earnings after the closing bell.
Meanwhile, RadioShack [RSH 15.61 2.52 (+19.25%) ] soared after the electronics retailer disconnected an unprofitable partnership with T-Mobile and replaced it with Verizon Wireless [VZ 36.33 0.11 (+0.3%) ]. Verizon will start providing postpaid and prepaid wireless products and services in more than 4,300 RadioShack stores starting Sept. 15.
A handful of companies raise their price targets on Broadcom [BRCM 38.32 3.41 (+9.77%) ] and Baidu [BIDU 164.1716 7.6316 (+4.88%) ] after both tech firms posted earnings that beat estimates.
The S&P/Case Shiller home price index of home prices in 20 metropolitan areas held steady on a seasonally adjusted basis and in line with economists' expectations, according to a Reuters poll.
On the housing front, new home sales fell 1 percent to a seasonally adjusted 312,000-unit annual rate in June, but a sharp rise in prices and declining supply suggested the market for new houses was starting to stabilize, according to the Commerce Department. Economists had expected sales at a 320,000-unit rate, according to a Reuters poll.
Meanwhile, consumer confidence gained slightly to 59.5 in July from a downwardly revised 57.6 in the prior month, according to the Conference Board. Economists had expected a reading of 56.0, according to a Reuters poll.
At least eleven companies are scheduled to start trading this week, marking the biggest IPO week since November 2007. Among notable names, Dunkin' Brands plans to sell 22.3 million shares at a price range of $16 to $18 and will trade under the ticker "DNKN.
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