Market Wrap: Blame Ukraine Again as Stocks Dip

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UKRAINE-RUSSIA-CRISIS-POLITICS-POROSHENKO
Sergei Supinsky/AFP/Getty ImagesUkrainian President Petro Poroshenko

By ALEX VEIGA

U.S. financial markets ended slightly lower Thursday, marking their first loss in a week of record highs.

The escalating conflict in Ukraine, disappointing retail earnings and profit outlooks combined to weigh down the market, eclipsing some good news on the U.S. economy and labor market.

“The key driver was largely the Ukraine news and the uncertainty of what that means,” said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank.

U.S. stock index futures pointed to a lower opening in premarket trading Thursday, following a downward turn in global stock markets as traders reacted to the developments in Ukraine.

Ukrainian President Petro Poroshenko said Russian forces had entered his country. He called an emergency meeting of the nation’s security council. The yield on the 10-year U.S. Treasury note declined as investors sought out lower-risk assets.

A string of disappointing earnings and profit outlooks late Wednesday and early Thursday also weighed on the market early on.

Not all the news was discouraging.

The Commerce Department estimated that the U.S. economy grew at an annual rate of 4.2 percent in the April-June quarter.

The Labor Department added to the good news, saying the number of Americans seeking unemployment benefits slipped last week to 298,000, a low level that signals employers are cutting fewer jobs and hiring is likely to remain strong.

“The economic data in the U.S. continues to look quite good,” Davidson said.

Nonetheless, major U.S. stock indexes opened lower. They pared some of their losses as the day went on, but remained down the rest of the day.

All told, the Standard Poor’s 500 index (^GPSC) fell 3.38 points, or 0.2 percent, to 1,996.74. The index hit record highs the first three days of the week. The Dow Jones industrial average (^DJI) slid 42.44 points, or 0.3 percent, to 17,079.57. And the Nasdaq composite (^IXIC) shed 11.93 points, or 0.3 percent, to 4,557.69.

Major U.S. indexes are on track to end higher for the month and are up for the year.

Trading volume was lighter than the recent average ahead of the Labor Day holiday.

Investors seized on the lackluster earnings to reduce their holdings in several retailers.

Williams-Sonoma (WSM) tumbled 12 percent after the cookware and home furnishings company issue a disappointing full-year profit outlook late Wednesday. The stock shed $8.96 to $65.93.

Tilly’s (TLYS) lost 4.3 percent after the company forecast a difficult summer, noting customer traffic was down and merchandise discounts were cutting into its profit. The stock slid 37 cents to $8.15.

Genesco (GCO) also declined after the apparel and footwear seller issued a profit outlook that was shy of Wall Street’s expectations. Genesco sank $6.73, or 7.6 percent, to $81.94.

Abercrombie Fitch (ANF) fell 4.8 percent after the teen clothing company reported revenue that fell short of analysts’ estimates. The stock slid $2.13 to $41.87.

The poor earnings and outlooks from retailers ran counter to what has otherwise been a strong corporate earnings season, which has helped drive a late-summer revival for U.S. stocks.

The dour outlooks are particularly discouraging when one considers that the sector is entering what traditionally is the best season for retailers, said JJ Kinahan, chief strategist at TD Ameritrade.

“That does put a bit of a note of caution over everything,” he said.

Elsewhere in the market, the price of oil rose for the third day in a row on evidence of a stronger U.S. economy. Benchmark U.S. crude rose 67 cents to close at $94.55 a barrel on the New York Mercantile Exchange.

Wholesale gasoline rose 0.7 cent to close at $2.753 a gallon and natural gas rose 4.1 cents to close at $4.044 per 1,000 cubic feet.

Brent crude, a benchmark for international oils used by many U.S. refineries, fell 26 cents to close at $102.46 on the ICE Futures exchange in London.

The yield on the 10-year Treasury note fell to 2.34 percent. In metals trading, gold climbed $7 to $1,290.40 an ounce, silver rose 13 cents to $19.53 an ounce and copper fell 5 cents to $3.13 a pound.

What to Watch Friday:

  • Big Lots (BIG) releases quarterly financial results before U.S. markets open.
  • The Commerce Department releases personal income and spending for July at 8:30 a.m. Eastern time.
  • The Institute For Supply Management-Chicago releases its purchasing managers index for August at 9:45 a.m.
  • The University of Michigan issues its index of consumer sentiment for August at 10:30 a.m.
  • When you get into that back office and start signing all the paperwork, the topic of extended warranties will come up pretty quickly. Ellie Kay, an author of 15 finance-related books, notes that such warranties are negotiable.

    “Before you sign on the dotted line, check out other sources of extended warranty pricing,” she says, such as those provided by your bank or insurance company. “Then either use this lower price in the financial and insurance office for negotiation to get them to match the price, or buy it from the other source.”

    A scenario from Kay during her last car purchase: “The dealer quoted me $4,200 for a three-year extended warranty for my 280SLK Roadster Mercedes that included a $250 deductible. USAA — my insurance company — gave me a three-year warranty for $3,200 with zero deductible. I’ve used the new warranty once already. The bill was $1,100 and I paid nothing because of the zero deductible.”

    Bottom line: The default extended warranty is almost always the worst deal.

    1. You’ll get the dealer’s extended warranty

  • You may have a monthly payment figure in your head when shopping for a new car, but your interests are better served when you focus on the out-the-door price instead.

    “A sales rep can often trick you by offering a lower monthly payment, but [one that] will stretch out the terms of the loan,” says David Bakke, a car buying expert at MoneyCrashers.com.

    You can reduce the overall cost of the car via negotiation and by skipping accessories and add-ons. “Things like navigation systems, rims, floor mats or car audio/entertainment systems can be purchased from a third party vendor, usually for less.”

    All our experts agree: Don’t even mention your preferred or maximum monthly payment price.

    2. You’ll negotiate based on your monthly payment

  • 3. You’ll cave on your trade-in price

  • It may be tempting to just head to one local dealership, take a test drive or two, and walk out the door with a new car, but you’ll save yourself a lot more money by doing a little pre-shopping research.

    “Once you have your choices narrowed down to a few makes or models, contact the Internet sales manager of a few dealerships,” suggests Bakke. “These folks can often offer better pricing than what you’d find dealing with an on-site sales person. Plus, you save time.”

    In addition to, or in lieu of, e-shopping, Joshua Duvall of Capital Financial Services says to “find a few vehicles from different manufacturers and pit them against one another.” He explains that the car buying market is based on quantity and the fact that dealers want to move cars. “Force them to compete for your business.”

    4. You won’t shop around enough or do enough research

  • “Dealerships often employ hard-sell tactics that can be overwhelming for a first-time buyer, so it is a good idea to go with someone who has been through the process before,” explains John Ganotis, founder of CreditCardInsider.com.

    Granotis also says that if you’re buying a used vehicle, it’s wise bring along a friend who knows his or her stuff when it comes to car health. For example, a mechanic who can peek under the hood, or recognize if something subtle is wrong during the test drive, would be especially handy.

    5. You’ll go to the dealership alone

  • 6. You’ll buy new

  • OK, so sometimes ol’ Sally breaks down, and you need to get a new set of wheels, stat. If you don’t fall into that category, though, our experts recommend choosing your purchase date strategically, such as during a major sale. Better yet, wait for the end of a promotion.

    Dealership salespeople often receive a bonus if they meet their targets during a promotion. Even if they lose money on a vehicle at the end of a promotion, they typically make up for the loss with their promotion target bonus.

    Erin Konrad of CouponPal suggests buying near the end of the month. This is when salespeople are trying to meet monthly quotas and are more likely to negotiate.

    7. You’ll rush to buy

  • Be familiar with common strategies employed by dealerships and sellers. For example, MSN Money warns against the “four-square” trick. (I’ve had this one used on me.) In this trick, the salesperson draws four boxes with a number in each: your old car’s trade-in value, the new car’s price, the down payment, and your monthly payment. “From there, the salesperson begins crunching numbers — most likely making it too hard for you to follow,” writes MSN. He or she will shift your focus to the monthly payment, which can result in a longer loan and a higher interest rate.

    Another common trick is to heighten your sense of urgency, says Business Insider via Gregg Fidan, founder of RealCarTips.com and the author of “Honest Guide to Buying a Car.” For example, the dealer may tell you “that color is not available; there’s only three left statewide; the price is good only for today; someone else is interested in the car, better decide quickly, etc.” In this case, be patient and courteous, but remain level-headed and never rush to buy. Study up on Fidan’s list of 112 car-buying scams.

    To sum up the list: Don’t let yourself get too caught up in the excitement of shiny metal, and remember that in six months that “new car excitement” will have faded, and you’ll be due for an oil change.

    8. You’ll fall for sales tricks

  • More from Wendy Rose Gould:

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