Don’t let Tuesday’s 220 point Dow rise fool you. Stocks are still being held back by a bunch of headwinds. Adam Shell for USA TODAY.
After posting its biggest one-day point gain since March 1, the Dow’s upward march didn’t last long after a rare profit miss from Walt Disney and a warning of lower 2016 profits from department store giant Macy’s brought stocks back down to earth.
Another negative for the market was Staples (SPLS) decision to scrap its $6.3 billion acquisition of rival office supply superstore Office Depot (ODP) after a federal judge blocked the planned merger, siding with regulators that a marriage of the two companies would “substantially impair competition.” Staples shares fell more than 17% and Office Depot stock plunged a whopping 39%.
After a 222-point surge Tuesday, the Dow Jones industrial average gave nearly all of that back as it fell 217 points, or 1.2%, to 17,712. The broader Standard & Poor’s 500 stock index and the technology-dominated Nasdaq each fell 1.0%.
Stocks had gotten a big boost from a rally in oil Tuesday, but a similar jump in crude on Wednesday failed to lift stocks. U.S.-produced crude rose more than 3% to $46.11 a barrel
The big downer for the Dow Wednesday was the first earnings miss from Disney (DIS) in five years. That downbeat profit news, which was reported after last night’s close, pushed Disney shares down 4.0% to $102.29. Disney’s big loss was responsible for the bulk of the Dow’s decline today.
Macy’s (M), which lowered its full-year forecast amid an expectation of continued weak spending patterns from consumers, saw its shares plunge by more than 14%. It dragged down the rest of the retail sector.
Yesterday’s big rally also fizzled overseas. In Europe, the broad Stoxx Europe 600 index was off 0.5%.
In Asia, shares were mixed. Japan’s Nikkei 225 edged up 0.1%, while stocks in Hong Kong closed down nearly 1%. Stocks in mainland China rose 0.2%.