U.S. stocks decline on Bernanke’s comments as HP shares tumble

Campbell Soup

Campbell Soup Co. slid 2.1 percent to $36.18. The world’s largest soup maker said earnings this quarter could be “negatively impacted” amid high soup inventories and an increase in marketing spending.

Research In Motion Ltd. climbed 0.7 percent to $9.66 after Jefferies & Co. raised the stock’s rating to hold, saying the struggling maker of the BlackBerry may avoid a “worst-case scenario.” The shares pared gains of as much as 4.7 percent after news that the BlackBerry is being dropped by the U.S. government agency that investigates plane accidents because of the device’s reliability issues.

Archer-Daniels-Midland Co. added 2.8 percent to $26.27. The world’s biggest corn processor was raised to outperform from market perform at BMO Capital Markets by equity analyst Kenneth Zaslow. The 12-month share-price estimate is $32.

Lower earnings estimates are dragging down stocks from this year’s highs and their full effect has yet to be felt, according to Hasan S. Tevfik, a global equity strategist at Citigroup Inc. He compares the performance of an earnings-revision index, or ERI, compiled weekly by Citigroup with MSCI Inc.’s All-Country World Index since the beginning of last year.

More Cuts

Since the first week of May, the revision index has been less than zero, which means there were more estimate cuts than increases among analysts. The MSCI gauge of stocks in developed and emerging markets rose to its peak for the year in September and then lost as much as 6.7 percent.

“ERI remains an anchor for global equity markets,” Tevfik wrote. A similar disparity between estimate changes and share prices in 2011 was resolved when stocks declined in July and August of that year, the London-based strategist added.

Earnings projections for next year are poised to decline further, he wrote, citing the gap between analysts’ estimates for companies and strategists’ projections for stock indexes. Citigroup strategists are collectively calling for profit growth of 7 percent, trailing a 12 percent increase implied by company- specific estimates, Tevfik wrote. The lower figure may be too high, he added, as economic growth slows worldwide.

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