Stocks were mixed Monday at the start of a week packed with third-quarter earnings results.
The S&P 500 (^GSPC) fell 0.43%, or 11.89 points, closing lower for the eleventh time in the past 13 sessions. The Dow (^DJI) slipped 0.5%, or 126.86 points, while the Nasdaq (^IXIC) rose 0.26%, or 19.6 points.
Investors are looking to a full week of earnings releases, with a third of S&P 500 companies across the 11 sectors reporting this week. The docket includes tech heavyweights Amazon (AMZN), Google-parent Alphabet (GOOGL), Microsoft (MSFT) and Intel (INTC).
Following the second week of earnings, 74% of companies have beaten on earnings per share, while 58% have beat on sales and 47% on both, Bank of America strategist Savita Subramanian pointed out in a note. Botton-up earnings per share rose to $40.74, up from $40.46 the week prior. The Staples sector has seen the fewest EPS and sales beats, with BofA analysts pointing to currency headwinds.
Guidance so far has been slightly weaker, with the three-month ratio of above- versus below-consensus earnings guidance registering at 0.6, below the long-term average of 0.7.
“With only ~30 instances of guidance in Oct. so far, this week will be key, when companies across a broader range of sectors report,” Subramanian wrote. “Commentary on earnings calls has been mixed, but generally positive: mentions of ‘better’ or ‘stronger’ vs. ‘worse’ or ‘weaker’ is tracking slightly below-avg., but mentions of optimism are tracking above avg. and at a three-quarter high.”
NEWS: Saudi Arabia reportedly won’t weaponize oil as controversy over death of US journalist heats up
Saudi Arabia does not have plans of imposing an oil embargo on Western consumers, the country’s energy minister reportedly told Russia’s TASS news agency. Saudi Arabia is the world’s largest oil exporter. Concerns of an embargo reminiscent of one Saudi Arabia unleashed in 1973 against countries supporting Israel during the Yom Kippur war arose amid continuing tensions between the US and Saudi Arabia over the fate of Washington Post journalist Jamal Khashoggi. Saudi Arabia admitted for the first time Friday that Khashoggi was killed, while Saudi Prince Mohammed bin Salman has continued to deny any involvement.
International backlash over Khashoggi’s disappearance has dented Saudi Arabia’s relationship with foreign investors, leading to a selloff of Saudi Arabian stocks. Foreigners were net sellers of 4 billion riyals, or $1.1 billion, or stocks last week, Bloomberg reported. Meanwhile, major corporate executives have continued to abandon Riyadh’s Future Investment Initiative conference set to begin Tuesday, including leaders from Uber, JPMorgan Chase, Google Cloud, BlackRock, Blackstone and Credit Suisse, among others.
STOCKS: Hasbro tumbles in wake of Toys “R” Us demise, Instagram edges past Snapchat as most-used teen social media platform
Hasbro’s (HAS) stock tumbled after the toy retailer posted weak earnings and announced it will lay off up to 10% of its employees after the fallout of Toys “R” Us, which had been the world’s largest independent toy retailer. Net revenue fell 12% in the third quarter to $1.57 billion, from $1.79 billion in the same period of 2017. Adjusting earnings came in at $1.93 per share, missing average analyst expectations of $2.24 per share, according to data compiled by Bloomberg. The company anticipates that that job cuts will save between $30 million and $40 million by 2020. Shares of Hasbro fell 3.09% to $95.01 at the end of trading Monday, paring some losses from earlier in the day.
Facebook-owned (FB) Instagram has overtaken Snapchat (SNAP) as the most-used social media platform among young people, Piper Jaffray analyst Erinn E. Murphy wrote in a note Monday. According to a Piper Jaffray survey, 85% of teenagers use Instagram at least once per month, while 84% use Snapchat. Facebook’s main site use, however, has continued to decline, with only 28% of 15-year-olds using Facebook at least once per month, from about 40% in fall of 2016. Instagram has been viewed as Facebook’s biggest growth engine, and the photo-sharing platform is estimated to be worth $100 billion, if it were a standalone company. Snapchat’s stock rose 0.59% to $6.85 per share at market close Monday, while Facebook’s stock gained 0.47% to $154.78 per share.
Brendan Iribe, former CEO and co-founder of Oculus, said in a post on Monday that he is leaving Facebook, which acquired the artificial and virtual reality company in 2014. Iribe’s departure is the latest in a string of executive exits among founders of startups acquired by Facebook. Instagram co-founders Kevin Systrom and Mike Krieger stepped down from the company in September amid reports of tension between the two co-founders and Facebook CEO Mark Zuckerberg. WhatsApp co-founders founder Brian Acton and Jan Koum also departed earlier this year.
Netflix (NFLX) will issue $2 billion in new debt largely to fund new content, the streaming giant said Monday. This will result in about $10 billion in long-term debt for the company, which has struggled to staunch bleeding free cash flow, or operating cash flow less capital expenditures. Netflix reported its year-to-date free cash flow is negative $1.7 billion. Shares of Netflix fell 0.94% to $329.54 per share as of market close Monday.
Kleenex parent Kimberly-Clark Corp (KMB) reported third-quarter earnings and revenue that beat Wall Street’s expectations. Adjusted earnings came in at $1.71 per share on revenue of $4.58 billion, exceeding average expectations for earnings of $1.63 per share on revenue of $4.52 billion. The company’s board also said that Michael Hsu will replace Thomas Falk as CEO as of Jan. 1. Falk, who served as top executive since 2002, will stay on as executive chairman. The stock fell 3.47% to $106.40 per share by the end of trading, turning around after advancing at market open.
ECONOMY: Chicago Fed National Activity Index comes in short
The Chicago Federal Reserve’s barometer for economic activity pointed to slower expansion for September. The reading registered at 0.17 against August’s upwardly revised level of 0.27 and average economist expectations for September of 0.21, according to data compiled by Bloomberg. Readings greater than 0 suggest growth above the historical trend, while negative readings point to growth below historic trends.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: