Sat | Nov 17, 2018

US indexes slip; GM, Ford fall after missing sales forecasts

Published:Wednesday | January 6, 2016 | 12:00 AM

United States stocks moved lower on Tuesday afternoon, a day after a plunge in China unsettled investors worldwide. General Motors (GM) and Ford slumped as their December sales fell short of analysts' estimates. Health care stocks posted gains as drugmakers moved modestly higher.

The Dow Jones industrial average fell 80 points, or 0.5 per cent, to 17,068 as of 12:05 p.m. Eastern time Tuesday. Standard & Poor's 500 index lost five points, or 0.2 per cent, to 2,008. The Nasdaq composite gave up 17 points, or 0.4 per cent, to 4,886. Stocks opened higher on Tuesday following a sharp drop on Monday, but were unable to sustain those gains.

Gilead Sciences climbed. Late Monday, the company said it will receive a sped-up review of a new hepatitis C treatment, and on Tuesday, Gilead reported positive results from a clinical trial of a hepatitis B drug. The company plans to file for marketing approval by the end of March. Gilead added US$1.17, or 1.2 per cent, to US$99.18, recovering some of its loss from Monday.

Also trading higher were Merck & Co, which rose 59 cents to US$53.07, and Bristol-Myers Squibb, which picked up US$1.29 to US$68.32.

Gun makers continued to trade higher as President Obama announced executive actions intended to reduce gun violence and unregulated sales. The prospect of additional background checks and other regulations often boosts demand for guns.

Smith & Wesson rose US$2.63, or 11.3 per cent, to US$25.91 and Sturm Ruger added US$4.61, or 7.5 per cent, to US$66. Late Monday, Smith & Wesson raised its profit estimates for the year, saying sales were better than it had expected. Earlier, data from the national background check programme showed background checks surged in December, suggesting strong sales.

Smith & Wesson shares have more than doubled in value over the last year, and Sturm Ruger is up more than 80 per cent.

Auto makers reported their December and full-year sales on Tuesday. Car shopping site expects that 1.7 million cars were sold, which would make last month the biggest December in history for the auto industry. It also expects that the reports will show 2015 was the biggest sales year in the industry's history.

GM said its US sales rose 6 per cent and Ford's sales increased 8 per cent. However, those totals fell short of analysts' projections, and shares of GM fell 90 cents, or 2.7 per cent, to US$32.41 and Ford declined 41 cents, or 2.9 per cent, to US$13.56.

Elsewhere, Fiat Chrysler sales grew 13 per cent, Toyota's sales rose 11 per cent and Nissan's sales climbed 19 per cent.

Spirit Airlines jumped after the company replaced CEO Ben Baldanza. Baldanza helped make Spirit into an "ultra-low cost carrier" with low prices and fees for everything from snacks, seat assignments, and space in overhead bins.

The company also became known for splashy promotions and "pre-reclined" seats that couldn't be lowered, letting the company fit more people on its planes. However, shares were down by about half over the last year, and in November, they hit two-year lows.

Spirit rose US$2.64, or 6.7 per cent, to US$41.82.

Despite rising tensions between Saudi Arabia and Iran, oil prices continued to tumble because demand appears weak while stockpiles are large. US crude fell 55 cents, or 1.5 per cent, to US$36.21 a barrel in New York. Brent crude, the international standard, fell 80 cents, or 2.1 per cent, to $36.42 a barrel in London. The price of natural gas fell 2.7 per cent to US$2.27 per 1,000 cubic feet.

- AP