Stocks turn lower after Sandy

10:57 AM, Oct 31, 2012   |    comments
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A trader stands outside the New York Stock Exchange as people return to work on Wall Street, October 31, 2012 while New Yorkers cope with the aftermath of Hurricane Sandy. (TIMOTHY A. CLARY/AFP/Getty Images)
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  • NEW YORK -- Stocks turned lower Wednesday after U.S. financial markets opened smoothly for their first trading session post-Sandy.

    PHOTOS | Superstorm Sandy

    The Dow Jones industrial average and S&P 500 index opened higher, but then joined the Nasdaq composite in heading lower before noon.

    The New York Stock Exchange was operating on generator power as much of lower Manhattan remains without electricity because of the storm.

    The exchanges closed Monday and Tuesday as Hurricane Sandy approached and struck the nation's financial center in the New Jersey-New York City area.

    Traders and investors were pleased to see the market open without a hitch.

    "It's good to see things happen so smoothly on the opening," said Joe Kinahan, managing director at TD Ameritrade. "The fact the market opened so smoothly is a vote of confidence."

    Investors clearly were paying special attention to industries affected by the storm. At the center of the day's trading were property and casualty insurers, many of which will be on the hook for storm-related losses.

    The SPDR S&P Insurance exchange traded fund(symbol: KIE), which owns 44 insurance stocks, was down 0.3%, following a 0.7% decline Friday before the storm. Allstate (symbol: ALL) fell $0.47 or 1.2% $39.68 Wednesday, following a 0.9% loss Friday. Allstate is scheduled to report quarterly earnings after the market closes.

    Computer maker Apple shed 2.1%, or $12.92 to $591.08 on its news this week of a personnel shakeup at the top of the company, which included the departure of the executive behind its smartphone unit. And General Motors added $1.01, or 4.3% to $24.29 after the automaker reported quarterly profit that beat Wall Street expectations.

    The two-day disruption in trading came at a nervous time for the stocks market as investors were in the process of digesting mostly disappointing earnings results. Corporate profit growth, which had been the engine of the stock market's rise since 2009, sputtered in the third quarter. With more than half the companies in the S&P 500 stock index reporting results, growth was coming in at just 1.1%, worst showing since the third quarter 2009, says S&P Capital IQ. Just 36% of companies in the S&P 500 have beaten revenue forecasts, well below the 56% that usually do.

    Investors will get plenty of new earnings data to chew on the first day back. A number of key and widely watched companies are expected to report quarterly earnings, including Allstate, Anheuser Busch Inbev, First Solar, General Motors, Hyatt Hotels, MasterCard and Clorox.

    In addition, Facebook employees will get their first chance to sell shares granted to them with a lockup provision. Facebook stock opened down $1.01 to 20.93 or -4.6% at the open Wednesday.

    Investors have some macro concerns weighing on them, most important the shaky economy in Europe and looming stiff budget cuts if Congress is unable to find ways to cut spending by the end of the year. Tax breaks will end and deep cuts will be made to the defense budget and Medicare as part of the so-called fiscal cliff, which could jeopardize economic growth. Meanwhile, slowing growth in China is wiping out what had been strong demand from Asia.

    Investors will get fresh data on Asia Wednesday as a survey of purchasing managers in China is due. Economists expect that gauge to rise to 50.2 from 49.8, according to economists polled by Bloomberg News.

    Asian stocks were strong Wednesday night, perhaps lending some strength to U.S. stocks. The Nikkei 225 index added nearly 1% to 8,928.29 and the Shanghai Shenzhen CSI 300 index added 0.7% to 2256.10.

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