While you were sleeping Coca-Cola disappoints

Wall Street retreated from record highs as investors were disappointed with corporate earnings such as from Coca-Cola and awaited Federal Reserve Chairman Ben Bernanke’s testimonial before Congress, beginning tomorrow.

Shares of Coca-Cola dropped, last down 1.8 percent, after the company said quarterly profit sagged 4 percent.

“Our second-quarter volume results came in below our expectations, reflecting an ongoing challenging global macroeconomic environment and unusually poor weather conditions in the quarter,” Muhtar Kent, chairman and chief executive officer of Coca-Cola, said in a statement.

Goldmans Sachs said earnings doubled in the second quarter, exceeding expectations. Still, shares of the bank fell, last down 1.4 percent.

In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.23 percent, the Standard & Poor’s 500 Index declined 0.37 percent, while the Nasdaq Composite Index slid 0.28 percent. Both the Dow and S&P 500 fell from record highs.

Meanwhile, Dell may delay a shareholder meeting on a US$24.4 billion buyout offer from founder Michael Dell and private equity firm Silver Lake Partners, with the pivotal vote too close to call, a person familiar with the matter told Reuters. The vote was scheduled for July 18.

Shares of Dell were last down 1 percent at US$13.01.

News on the US economic front was positive. Output at factories, mines and utilities rose 0.3 percent last month, after being steady in May, according to a Federal Reserve report. It was the biggest gain since February.

Separately, homebuilder confidence climbed to a 7-1/2-year high in July, with the National Association of Home Builders/Wells Fargo index of builder sentiment rising to a better-than-expected 57 this month, up from a revised 51 in June.

“You’re seeing a significant pickup in demand for new residential dwellings,” Brian Jones, senior US economist at Societe Generale in New York, told Bloomberg News. “Mortgage rates are moving higher and pulling people in. And I think that in general, the economy is getting better.”

Jones’ forecast of 55 was the most accurate in the Bloomberg survey.

Bernanke is scheduled to deliver his semi-annual monetary policy report to Congress, testifying before the House Financial Services Committee in Washington on Wednesday and the Senate Banking Committee on Thursday.

Today, Kansas City Fed President Esther George said the central bank should soon ease back its US$85 billion in monthly bond buying amid signs of improvement in the labour market.

In Europe, the benchmark Stoxx 600 Index retreated 0.7 percent from the previous close. Germany’s DAX fell 0.4 percent, the UK’s FTSE 100 index gave up 0.5 percent France’s CAC 40 shed 0.7 percent.

A surprise drop in German investor confidence weighed on markets. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations slid to 36.3 in July, from 38.5 in June.


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