The Dow Jones Industrial Average has broken its four-day winning streak on Thursday after blue-chip companies reported lower-than-expected quarterly earnings.
The Dow closed lower with a loss of 1.24 percent, or 274.1 points, to 21,750.73, hitting below the 22,000 level again. All 30 components of Dow finished lower.
Dow stocks Wal-Mart Stores Inc and Cisco Systems, Inc. all reported weak quarterly earnings, which weighed heavily on the index.
Wal-Mart’s shares dropped 1.58 percent to close at $79.70 on Thursday. Second quarter earnings were down to 96 cents per share compared to $1.21 per share in the same quarter last year. Net income was down to $2.90 billion against $3.78 billion in last year’s second quarter. Adjusted earnings per share was $1.08, which is above analysts’ estimates. Revenue rose to $123.4 billion from $120.9 billion and ahead of analyst estimates of $122.8 billion. Same-store sales of Sam’s Club division were up 1.2 percent, but lags below analysts’ consensus of 1.6 percent.
The retail giant is expecting earnings of between 90 cents and 98 cents per share. Projected full-year adjusted earnings per share was raised to between $4.30 and $4.40 per share.
Shares of Cisco declined 4.02 percent to close at $31.04. The company’s second quarter results were in line with expectations, but projected a decrease in revenue for next quarter. Second quarter net income was $2.4 billion, or 48 cents per share, compared to $2.8 billion, or 56 cents, in the same period last year. Revenue also dropped 4 percent to $12.1 billion compared to $12.6 billion last year.
The networking equipment maker’s core switching and routing business segments saw a decline of 9 percent year over year. The company’s data center division dropped 4 percent, while collaboration business unit fell 2 percent.
First quarter revenue is expected to decrease between 3 percent and 1 percent year-over-year. GAAP earnings per share is forecasted to be in the range of 48 cents to 53 cents and adjusted earnings per share will be between 59 cents and 61 cents.
Cisco dragged the tech sector down, with tech giants Apple Inc., Amazon.com Inc., Nvidia Corp., and Microsoft Corp also posting declines. The Technology Select Sector SPDR ETF also slumped 0.9 percent.
Wal-Mart’s losses were offset by Alibaba Holding Ltd., reporting better-than-expected quarterly earnings that strengthened its premarket performance. Earnings per share was up 92 cents and adjusted earnings of $1.17 was slightly above the estimated 93 cents.
“Cisco is in the midst of a turnaround, and it is showing very slow progress in that, while Wal-Mart has had something like 12 straight quarters of revenue growth, which led to expectations getting a little ahead of themselves,” Mark Spellman, portfolio manager at Alpine Funds, said in a report by MarketWatch.
The two other U.S. stock benchmarks also finished low on Thursday.
The S&P 500 index also shed 1.5 percent, or 38.10 points, to close at 2,430.01. The technology sector declined 2 percent and the industrials and financials sector lost 1.7 percent. All 11 sectors under S&P 500 ended lower, which happened only twice this year.
The Nasdaq Composite Index plummeted 1.9 percent, or 123.19 points, to finish at 6,22.91.
The three major benchmarks last finished low at 1 percent or higher in May 17 this year.
On Wednesday, the Dow closed above the important 22,000-mark after the minutes of the Federal Reserve meeting was released. The minutes said that the central bank is struggling with low inflation levels.
The Dow climbed 0.1 percent, or 25.88 points, to settle at 22,024.87, running a four-day winning streak. It gained 180 points over the four days and had earlier finished higher closed higher in 14 of the last 18 trading days.