Indexes weakened in afternoon trading Tuesday, as earnings reports caused a tumble for General Motors (GM) and for home-improvement stocks.
The Nasdaq was down 0.5% and the S&P 500 0.3%. The Dow Jones industrial average did a little better, down 0.2% as components Procter & Gamble (PG) and Merck (MRK) rose following earnings reports.
Volume was running higher on the Nasdaq and NYSE.
The building products industry and other home-improvement stocks were rattled in a combination of weak earnings reports and a poor outlook from a major appliance maker. Air conditioning and heating, construction products, wood products, paints and appliances were industry groups down 2% to 6%.
Masco (MAS) plunged nearly 10% in heavy trading, falling below the long-term 200-day moving average. The stock had been forming a base-on-base pattern, but is now seriously damaged. Masco missed third-quarter profit expectations, and sales growth of 2% continued a trend of flat or low single-digit gains dating back to 2015. Masco — which makes doors, windows, plumbing fixtures and other construction products — is exiting its lower-margin cabinet business.
BMC Stock Holdings (BMCH) fell 5% in rapid trade. The supplier of lumber and other building products has been trading below the 200-day moving average for about two weeks. It's been below the 50-day line since Sept. 9.
Whirlpool (WHR) gapped down to a loss of more than 11% in the highest volume since at least April 26, where there was a similar earnings-related sell-off. The appliance manufacturer missed profit and sales estimates and it cut its full-year earnings outlook. Whirlpool expects to earn $14 to $14.25 a share in 2016, down from an earlier forecast of as high as $14.75. The company cited soft demand in the U.S. and the U.K. and the weakening of the British pound.
General Motors skidded 4% in heavy volume. The stock dipped below its 50-day moving average but shares remained in a long sideways pattern. The automaker beat profit and sales expectations and it forecast full-year earnings at the high end of $5.50-$6; that's above analysts' consensus of $5.85. But GM warned it may miss its 2016 European profit target due to Brexit. It also saw a softening in the U.S. auto market.
Waters (WAT) gapped down to a loss of nearly 12% in huge volume after it reported Q3 profit that met the consensus estimate. The maker of products for drug development reported adjusted earnings of $1.57 a share, up 11%, on sales of $526.8 million, a 5% increase. Waters had been a leading stock, mounting a 15% gain from a 140.80 buy point. It was forming a new base, but Tuesday's crash has roiled the pattern.
Metals stocks were leading the market, and a high-rated part of that sector made a breakout.
Ternium (TX) jumped nearly 5% as it topped the 23.69 buy point of a cup-without-handle base. Volume was running four times the average, leaving little doubt that a stampede of institutional investors was buying shares. The Luxembourg-based steel producer is in talks to acquire a steel plant in Brazil from Germany's ThyssenKrupp, according to reports.
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