US stocks drop on Argentine default, weak earnings

NEW YORK (AFP) - Wall Street stocks moved sharply lower in early trade on Thursday following news of Argentina's debt default, a rise in US jobless claims and disappointing earnings.

About 35 minutes into trade, the Dow Jones Industrial Average tumbled 135.19 (0.80 per cent) to 16,745.17.

The broad-based S&P 500 dropped 16.92 (0.86 per cent) to 1,953.15, while the tech-rich Nasdaq Composite Index sank 47.44 (1.06 per cent) to 4,415,46.

After hours of meetings Wednesday in New York, Argentine Economy Minister Axel Kicillof emerged to confirm that no deal had been reached with US hedge funds, setting the stage for Argentina's second default in 13 years.

The US Labor Department reported that jobless claims rose 23,000 from the previous week to 302,000. However, the four-week moving average fell to 297,250, suggesting the labor market continues to tighten.

Shares of Whole Foods Market fell 4.6 per cent after it lowered its 2014 profit forecast, while Kraft Foods dropped 3.4 per cent as second-quarter earnings tumbled 41.9 percent to US$482 million (S$601.2 million).

Dow member ExxonMobil shed 2.0 per cent despite reporting second-quarter earnings of US$2.05 per share, 19 cents above analyst forecasts. However, the company notched a 5.7 per cent decline in oil and gas production.

Johnson & Johnson, also in the Dow, dropped 0.9 per cent on reports it will withdraw a surgical tool used to eliminate fibroids in women on concerns the device can spread cancers.

US retailing giant Target dipped 1.3 per cent as it tapped former top Pepsi executive Brian Cornell as its new chief executive seven months after a data-hacking scandal rocked the company.

In its first day of trade, Synchrony Financial dropped 0.5 percent to US$22.88 after an initial public offering priced Wednesday night at US$23 a share, raising US$2.8 billion. Synchrony is General Electric's North American retail finance arm.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.58 per cent from 2.55 per cent, while the 30-year advanced to 3.34 per cent from 3.31 per cent. Bond prices and yields move inversely.