While you were sleeping: Disney, GE push Dow lower

Wall Street was mixed as shares of financial companies  sagged under the pressure of falling bond yields and the threat of Hurricane Irma, while Walt Disney and General Electric weighed on the Dow.

At the close of trading in New York, the Dow Jones Industrial Average fell 22.86 points, or 0.1%, to 21,784.78. However, the Nasdaq Composite Index edged 0.07% higher to 6397.87, while the Standard & Poor's 500 Index moved less than half a point to 2465.10.

In the Dow, Disney and GE fell 4.4% and 3.8% respectively. Microsoft and Visa led the gainers, rising 1.6% and 1.3% respectively.

Disney chief executive Bob Iger offered a disappointing update for the company's fiscal 2017 earnings.

GE outlook panned
JPMorgan Chase issued a bleak outlook for GE in a note, "Preparing for the Fall: It's worse than we think."

"We see a core operating performance that is below plan and, currently, a consensus expectations curve that we think remains too high, FCF [free cash flow] that is the weakest in the sector, and, with that backdrop, a valuation that is expensive, with limited incremental catalysts to change the narrative," JPMorgan Chase analyst Stephen Tusa wrote, CNBC reported.

"While visibility is low, we see downside risk to our well below consensus estimates," according to Tusa. The stock is likely to be capped around $US24 a share, he noted.

Some money managers expect Irma to further hurt some economic indicators in the near term, which could dampen expectations the Federal Reserve will raise interest rates later this year.

“That will probably change how the Fed approaches its December meeting,” said Tom Wright, director of equities at JMP Securities, the Wall Street Journal reported. 

US government-bond prices strengthened, sending the yield on the 10-year Treasury note down to 2.061% from 2.108% on Wednesday.

Stocks firmer in Europe
In Europe, the Stoxx 600 Index rose 0.3%, France's CAC 40 Index added 0.3%, the UK's FTSE 100 Index rose 0.6% and Germany's DAX Index climbed 0.7%.

The European Central Bank upgraded its forecast for economic growth in the eurozone this year to 2.2%, which would be the fastest pace in a decade.

ECB policy makers kept the central bank's interest rates unchanged and flagged that its asset purchase programme would run until December "or beyond, if necessary."

"The economic expansion, which accelerated more than expected in the first half of 2017, continues to be solid and broad-based across countries and sectors," ECB President Mario Draghi told reporters in Frankfurt.

"At the same time, the recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability."

The euro gained 0.7% to $US1.2002.

"Equities are reacting more to the stronger economy than the currency rate-a lot of companies will be able to cope with a euro at $US1.20," Simon Wiersma, an investment manager at ING Bank in Amsterdam, told Bloomberg.

"I can cope with it. Equities can still rise from here, though if the euro trends toward $US1.25, it will become a bigger concern."

(BusinessDesk)