By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
PepsiCo shares rise on earnings beat, buyback, dividend news
NEW YORK (MarketWatch) -- U.S. stocks were weaker on Wednesday
as investors awaited the outcome of the crucial meeting of eurozone
finance ministers to discuss Greece's debt obligations, while a
drop in oil prices delivered another blow to the volatile energy
sector.
The S&P 500 index(SPX) edged lower, with seven of 10 main
sectors trading lower. (SPH5)
The Dow Jones Industrial Average (DJI) declined with two-thirds
of its 30 components falling.
The Nasdaq Composite, however, (RIXF) defied the trend, edging
higher.
Headlines about Greece and whether it will leave the eurozone or
restructure its debts has been driving markets lately. Wall Street
rallied on Tuesday on rumors that Greece could get a six-month
extension to its bailout program. However, speculation was quashed
quickly by German Finance Minister Wolfgang Schäuble. Greece's
current bailout plan expires on Feb. 28, and some fear it will run
out of money before then.
Hulbert: U.S. stocks may take it in stride if Greece quits
euro
"Commentators generally seem to believe that the Greek stance in
the talks is unworkable, so that the risk of outright disaster is
still growing, but markets are priced for some kind of
stopgap-funding deal for Greece, which allows the ECB to continue
financing Greek banks and lets talks continue," said Kit Juckes, a
macro strategist at Société Générale, in a note.
Bottom line is earnings: Dan Greenhaus, chief strategist at BTIG
told clients in a note that "incredibly poor guidance" from the
S&P companies that have reported so far are keeping stocks from
progressing. "Almost all companies that are providing guidance are
guiding negatively, suggesting currencies are going to hit growth
by a few percentage points," he said.
Another factor for stocks is the recent, but sharp, reversal in
bond yields, coming as rate-hike forecasts have been dragged
forward. "As we've been saying for several quarters, equity-market
rallies almost always pause, and often decline, when yields back
up," said Greenhaus.
On the economic front, Moody's Investors Service said lower oil
prices won't be a boost for the global economy over the next two
years, due to headwinds from growth slowdowns in the eurozone,
China, Japan and Russia. However, the U.S. economy will benefit, it
said.
Stocks to watch: AOL(AOL) beat earnings expectations, but fell
short on revenue. Shares dropped 12% in early trade.
Rite Aid's(RAD) stock jumped after quarterly results. The
pharmacy chain also announced it has agreed to buy TPG's EnvisionRx
in deal valued at about $2 billion.
PepsiCo(PEP)(PEP) shares rose after the company beat earnings
expectations and announced share repurchases and dividend
increases.
Tesla Motors Inc.(TSLA) will report after the closing bell,
along with Baidu Inc. (BIDU) and Cisco Systems Inc.(CSCO).
Pier 1 Imports Inc. (PIR) plummeted 31%, after the company cut
its earnings-per-share outlook for fiscal 2015 on Tuesday
evening.
Also read: Today's Movers & Shakers
Other markets: European stocks fell, with Greek stocks off
another 3.5% as the wait for news out of the emergency meeting of
European finance ministers continued.
Crude-oil prices (CLH5) fell sharply, with the WTI futures for
March delivery down 1.9% at $49.09 a barrel.
Gold prices erased earlier gains, with futures for April
delivery (GCJ5) slipping $4.3 to $1,238.50 an ounce.
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