Disney Drops 9.5% Despite Strong Results

Company's revenue fell shy of forecasts
By Newser Editors and Wire Services
Posted May 7, 2024 3:41 PM CDT
Disney Drops 9.5% Despite Strong Results
The New York Stock Exchange is shown on May 7, 2024.   (AP Photo/Peter Morgan)

US stocks held relatively steady Tuesday as trading on Wall Street calmed following some sharp recent swings.

  • The S&P 500 rose 6.96 points, or 0.1%, to 5,187.70, its fourth straight gain.
  • The Dow Jones Industrial Average rose 31.99 points, or 0.1%, to 38,884.26.
  • The Nasdaq composite fell 16.69 points, or 0.1%, to 16,332.56.
Kenvue, the company whose brands include Band-Aids and Tylenol, rose 6.4% after topping analysts' forecasts for both profit and revenue in the latest quarter. The Walt Disney Co. sank 9.5% despite reporting stronger results for its latest quarter than analysts expected. Its revenue fell a bit shy of forecasts, and it expects its entertainment streaming business to soften in the current quarter, the AP reports.

They're among the tail end of companies reporting their results for the first three months of the year. The majority of companies has so far been beating forecasts for earnings, but they're not getting as big a boost to their stock prices afterward as they usually do, according to FactSet. Not only that, companies that fall short of profit expectations have seen their stock prices sink by more the following day than they have historically. That could suggest investors are listening to critics who have been calling the US stock market broadly too expensive following its run to records this year.

For stock prices to climb further, either profits will need to grow more dynamically or interest rates will need to fall. The latter still looks like a possibility on Wall Street following some events last week that traders found encouraging. Federal Reserve Chair Jerome Powell strongly suggested the central bank is still closer to cutting its main interest rate than hiking it, despite a string of stubbornly high readings on inflation this year. A cooler-than-expected jobs report on Friday, meanwhile, suggested the US economy could pull off the balancing act of staying solid enough to avoid a bad recession without being so strong that it keeps inflation too high.

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Elsewhere on Wall Street, Crocs jumped 7.8% after reporting better profit and revenue than expected. International Flavors & Fragrances, which makes ingredients used in food and perfume, gained 6.4% after reporting better profit and revenue than expected. It also said it expects its revenue for the full year to come in at the higher end of its forecasted range. Lucid Group tumbled 14.1% after the electric-vehicle maker reported a worse loss for the latest quarter than analysts expected. Builders FirstSource fell 19.1% despite topping forecasts for profit and revenue. The supplier of building products said a weakening multi-family market and higher mortgage rates were creating challenges. (More stock market stories.)

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