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US stocks decline as investors worry about airline profits

Published 21/07/2016

Stocks on Wall Street fell with airlines among the biggest fallers
Stocks on Wall Street fell with airlines among the biggest fallers

US stocks have fallen after a mixed set of earnings reports put at least a temporary halt to the market's record-setting run.

Airlines saw some of the sharpest drops on worries that falling fares will hurt their profits.

The Dow Jones industrial average sank, breaking a nine-day winning streak, its longest in three years. It lost 77.80 points, or 0.4%, to 18,517.23.

The Standard & Poor's 500 index fell 7.85, or 0.4%, to 2,165.17. The Dow and S&P 500 have been setting a series of all-time highs this week. The Nasdaq composite sank 16.03, or 0.3%, to 5,073.90.

"It's surprising how strong the market has been," said Rich Weiss, senior portfolio manager at American Century Investments. Not only are companies in the midst of reporting another quarter of weaker earnings, US economic growth is still only modest, and it is even weaker elsewhere in the world, he said.

"The only logical explanation is that it's a horse race and that, relative to the other horses, the US equity market is looking more attractive" than foreign stocks, bonds and other investments, Mr Weiss said.

Stock markets overseas were mixed after the European Central Bank left interest rates at record lows but also said that it could add stimulus as it assesses the impact of the United Kingdom's recent vote to leave the European Union.

The yield on the 10-year Treasury bond fell to 1.55% from 1.58% late on Wednesday.

Southwest Airlines was the worst-performing stock in the S&P 500. It reported weaker earnings growth than analysts expected and said a key revenue trend will turn down in the current quarter.

That helped drag down stocks across the airline industry. Delta Air Lines, United Continental Holdings and American Airlines Group all lost 2.7% or more.

AP

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