US stocks retreat from records, Tesla dives

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Traders work on the floor of the New York Stock Exchange, July 25, 2019. PHOTO: REUTERS

NEW YORK (AFP) - Wall Street stocks fell on Thursday (July 25), pulling back from records with several prominent companies, including Tesla and American Airlines suffering bruising declines following disappointing earnings reports.

Stocks have been bolstered in recent weeks by expectations that the Federal Reserve will cut interest rates next week.

But strong economic data, including Thursday's report showing an increase in durable goods sales in June, could lead to a less dovish Fed announcement, some investors worry.

"Good news has become bad news with the fear that the Fed will not be as accommodating as anticipated," said Quincy Krosby of Prudential Financial.

The Dow Jones Industrial Average dropped 0.5 per cent to 27,140.98.

The broad-based S&P 500 shed 0.5 per cent to 3,003.67, while the tech-rich Nasdaq Composite Index tumbled 1 per cent to 8,238.54.

Both the S&P 500 and Nasdaq had ended at records on Wednesday.

A heavy schedule of corporate earnings battered shares of some companies that disappointed, including Tesla, which plunged 13.6 per cent, Ford, which sank 7.8 per cent and chemical giant Dow, which shed 3.8 per cent.

American Airlines also stumbled, diving 8.4 per cent after raising its full-year estimate of the hit to earnings from the Boeing 737 Max to US$400 million, up US$50 million.

Southwest Airlines, another big Boeing customer, finished 0.4 per cent higher after pushing back the target date for returning the Max to service to January 2020, more than two months later than the current timeframe.

Southwest said it has begun talks with Boeing about compensation for the impact from widespread flight cancellations and delayed deliveries.

Boeing, which has set aside US$4.9 billion to compensate customers, dropped 3.6 per

cent, its second big decline in a row after reporting on Wednesday its biggest quarterly loss ever due to the Max.

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