Wall Street ended sharply lower today as weak earnings reports from media companies stirred fears that more viewers are ditching cable TV, dragging the sector to its worst two-day loss since the financial crisis.
The selloff was compounded by nervousness ahead of key jobs data on Friday that could provide clues about the timing of the first Federal Reserve interest rate hike in almost a decade.
Viacom fell 14.22 percent to its lowest in almost four years after reporting lower-than-expected quarterly revenue due to weakness in its cable TV business. Walt Disney was off 1.79 percent and down for a second session after it lowered profit guidance for its cable networks unit on Tuesday.
The S&P 500 media index lost 2.12 percent and notched its biggest two-day fall since November 2008, with Time Warner, Comcast and CBS all in the red and Twenty-First Century Fox down 6.4 percent.
Viacom’s results and Disney’s warning put the spotlight on a trend of viewers shifting from cable TV to Internet-based services such as Netflix, which rose 2.21 percent.
The Dow Jones industrial average fell 0.69 percent to end at 17,419.75 and the S&P 500 lost 0.78 percent to 2,083.56. The Nasdaq Composite dropped 1.62 percent to 5,056.44, its biggest one-day tumble since early July.
Eight of the 10 major S&P sectors were lower, with the health index’s 2.09 percent fall leading the decliners. Allergan fell 5.1 percent after the Irish drugmaker reported a second-quarter loss.
European shares also fell, with weak corporate results weighing on enzyme company Novozymes and Deutsche Post even as UK stocks outperformed on receding rate-hike fears.
The pan-European FTSEurofirst 300 index, which rose 1.3 percent in the previous session, closed down 0.8 percent at 1,589.38 points. The euro zone’s blue-chip Euro STOXX 50 index declined by 0.2 percent.
Novozymes slid by around 13 percent after reporting second-quarter earnings below expectations. Deutsche Post’s shares also fell after cutting its 2015 profit outlook.
Weak oil prices also weighed on energy stocks.
However, Belgian financial company KBC rose 3 percent after it posted higher profits. Reinsurer Munich Re firmed 1.5 percent on an improved outlook.
The rise in Munich Re enabled Germany’s DAX to slightly outperform the region, though Deutsche Post put a drag on the index when it lowered its profit target. Britain’s FTSE was a big outperformer, down only 0.1 percent, after a slew of Bank of England data showed the central bank was in no hurry to raise interest rates.
Meanwhile, Japanese shares rose as the yen sank to a two-month low against the dollar although most of their early gains were erased on weaker Chinese stocks and caution ahead of Friday’s US non-farm payrolls report.
The Nikkei average rose 0.2 percent to 20,644.44. It touched 20,817.48, the highest since July 21, earlier in the session.
The broader Topix gained 0.5 percent to 1,673.58 and the JPX-Nikkei Index 400 climbed 0.5 percent to 15,112.80.
Source: Buenos Aires Herald