U.S. Stocks Decline; UPS, Kimberly-Clark Slump On Earnings

NEW YORK (AP) — U.S. stocks edged lower on Friday, on track for their first day of losses this week, as investors digested earnings reports.

         UPS shares fell sharply after the company cut its earnings outlook for the year. Kimberly-Clark dropped after posting earnings that fell short of expectations.

 

KEEPING SCORE: The Standard & Poor's 500 index slipped three points, or 0.2 percent, to 2,059 as of 12:25 p.m. Eastern time. The Dow Jones industrial average fell 43 points, or 0.2 percent, to 17,771. The Nasdaq composite bucked the trend. It rose nine points, or 0.2 percent, to 4,760.

 

EARNINGS BLAST: Corporations are reporting fourth-quarter results. While oil earnings are expected to weigh on results, companies in the S&P 500 index are still expected to increase profits by 4.1 percent, according to data from S&P Capital IQ. That's slower than the 4.9 percent increase in the same period a year earlier.

 

TOUGH YEAR AHEAD: Kimberly-Clark, which makes Huggies diapers and Kleenex tissue, reported a fourth-quarter loss of $83 million. The results fell short of Wall Street projections and the company forecast lower sales in 2015. The stock dropped $7.71, or 6.4 percent, to $111.38.

 

DELIVERING BAD NEWS: UPS said it was hurt by the huge cost of guaranteeing punctual deliveries over the holidays. That forced the shipping company to cut its outlook for the year. UPS hired more workers and boosted capacity at its facilities during the busy holiday season to avoid a repeat of 2013, when shippers struggled with a deluge of orders. The stock slumped $10.75, or 9.4 percent, to $103.52.

 

EUROPE FACTOR: On Thursday, global stocks rose sharply after the European Central Bank announced that it would buy 60 billion euros ($68 billion) of government and corporate bonds each month at least through September 2016. The 1.1 trillion euro program signals the willingness of the ECB to boost the economies in the 19-nation euro currency alliance.

 

EUROPEAN TRADING: France's CAC 40 jumped 1.99 percent and Germany's DAX rose 2.2 percent. Britain's FTSE 100 added 0.3 percent.

 

STARBUCKS EARNINGS: Starbucks quarterly earnings soared 82 percent as the coffee chain drew in more customers over the holidays, thanks to its expanded food and drink menu. The company's stock jumped $5.52, or 6.7 percent, to $88.28 Friday.

 

OIL PRICES: Benchmark U.S. crude fell 52 cents to $45.80 a barrel. The price of oil has fallen about 5 percent this week, resuming its slide after steadying a week earlier. Still, the price is down by more than half from $107 in June.

 

THE QUOTE: U.S. stocks should give investors returns of 8 to 9 percent this year, says Paul Christopher, Head of International Strategy, Wells Fargo Investment Institute. Stocks will likely benefit from rising consumer confidence, as a drop in gasoline price leaves people with more money.

         "We think that the positives outweigh the negatives and it should be an occasion for buying," said Christopher.

 

BOND TRADING: In government bond trading, prices rose. The yield on the 10-year government bond fell to 1.83 percent from 1.86 on Thursday.

 

CURRENCIES: The dollar continued to strengthen against most major currencies. Against the euro, the dollar traded at $1.1265 from $1.356. The euro is trading at its lowest against the dollar in more than a decade.

         The U.S. currency slipped slightly against the Japanese yen, dropping to 117.81 yen from 118.56 yen the previous day.

         – by AP Reporter Steve Rothwell 

 

 

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