While you were sleeping: HP, Wal-Mart disappoint

While you were sleeping: HP, Wal-Mart disappoint

(BusinessDesk) May 18 - Equities in Europe and on Wall Street declined on a disappointing earnings forecast from Hewlett-Packard Co and an unexpected fall in U.S. housing starts.

Underpinning recent economic reports suggesting weakness, today’s data showed U.S. housing starts and permits for future home construction fell in April while the Federal Reserve reported factory output slumped last month.

In afternoon trading on Wall Street, the Dow Jones Industrial Average fell 0.82%, the Standard & Poor’s 500 Index dropped 0.36% and the Nasdaq Composite Index declined 0.39%.

Hewlett-Packard dragged the S&P 500 lower. The No. 1 personal-computer maker slashed a billion dollars from its sales forecast for the year and said profit was falling short as consumers weren’t buying PCs.

Wal-Mart Stores Inc said sales at U.S.-based Wal-Mart stores open at least a year fell 1.1%, the eighth straight drop.

"Earnings from blue chips as well as data is showing evidence of an economic slowdown," Chad Morganlander, a portfolio manager at Stifel Nicolaus & Co in Florham Park, New Jersey, told Reuters.

"Early evidence of deterioration within the U.S. consumer is showing in numbers from Hewlett-Packard and Wal-Mart."

Even so, LinkedIn Corp said its initial public offering will likely raise 30% more than previously expected. The company now plans to sell shares at US$42 to US$45 each, up from a previous range of US$32 to US$35.

"Investors have to put their money somewhere," Yvan-Claude Pierre, a partner with DLA Piper in New York, told Reuters. "There's a lot of money chasing very few deals."

U.S. Treasuries rose as the signs of a weakening economy and corporate profits made the fixed-income securities more appealing.

Yields on the 10-year note shed two basis points to 3.13% at 1.10pm in New York, according to Bloomberg Bond Trader prices. Earlier it dropped as low as 3.10%.

The greenback fell 0.2% against a basket of its major counterparts. The euro was last 0.3% higher at US$1.4194.

Europe’s benchmark Stoxx 600 Index dropped 1%.

Commodities dropped including gold and oil. Brent crude for July delivery lost US$1.60 to US$109.24 a barrel by 1650 GMT.

Filings showed billionaire financier George Soros sold most of his US$800 million stake in bullion in the first quarter. Spot gold fell 0.5% to US$1,481.90 an ounce.

"With the housing numbers coming in soft and industrial production coming in [near] flat, there is some concern there will be a double dip in the housing slump and on a broader scale for the economy as a whole," Rob Kurzatkowski, futures analyst with OptionsXpress in Chicago, told Reuters.

"We're seeing further liquidation on the precious metals, and that's offering some outside pressure on the oil market as well."

(BusinessDesk)

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