The U.S. stock markets ended the trading session lower on Tuesday primarily due to the little progress in the debt negotiations between Greece and its international creditors.
The finance ministers in the European region adjourned their meeting on Greece and indicated that a financial aid deal is still out reach. They will resume their meeting on Thursday.
Dutch Finance Minister Jeroen Dijsselbloem said, “Unfortunately we have not reached an agreement yet. We are determined to continue work during the night if necessary.”
Greece and its international creditors disagreed on some of its proposed economic measures including an increase in pension contributions and the phase out of additional payment for the poorest retirees by 2022, additional sales tax, extra charge on company profits, and a debt relief.
Jim Paulsen, chief investment strategist at Well Capital Management commented that Greece’s debt negotiation is moving the markets, but it is becoming less significant. According to him, “At this point, stock traders are watching the bond market carefully, as changes in yields, which can happen rapidly, will affect stock prices.
Icahn warns the market is extremely overheated
Activist investor Carl Icahn warned that the market is “extremely overheated” particularly by speculative corporate bonds in the United States.
“I believe the market is extremely overheated- especially high-yield bonds. If more respected investors had warned about the market in ’07, we might have avoided the crisis in ’08,” wrote Icahn in a message posted on Twitter.
Bloomberg noted that U.S. companies sold $2.3 billion junk bonds since the beginning of 2009 as investors look for higher-yielding assets while the Federal Reserve maintained low interest rates.
U.S. stock markets
- Dow Jones Industrial Average (DJIA)- declined 0.98% to 17,966.07 points
- S&P 500- dropped 0.74% to 2,108.58 points
- NASDAQ- fell 0.73% to 5,122.41 points
- Russell 2000- tanked 0.92% to 1,283. 92 points
Market gainers and losers
Box Inc (NYSE:BOX) climbed 5.70% to $18.55 per share driven by its partnership agreement with International Business Machines Corp (NYSE:IBM). The companies agreed to integrated their existing cloud products and services and create new solutions for enterprises.
The stock price of FireEye (NASDAQ:FEYE) declined 3.53% to $50.95 per share. Analyst at UBS recently downgraded their rating on the stock to Neutral. On the other hand, Citigroup analyst Walter Pritchard sees stock gains for the company. According to him, FireEye should at least maintain its 46% market share in the standalone Advanced Persistent Threat (APT) until 2019.
The shares of Fortinet (NASDAQ:FTNT) dropped 3.48% to $41.71 per share. Pritchard lowered his rating on the stock to Neutral citing the reason that he sees limited gains for the company.
General Motors Company (NYSE:GM) fell 3.11% to $35.17 per share. Goldman Sachs analyst, Patrick Archambault downgrading his rating on GM to Neutral and reduced his price target to $40 per share.
Lennar Corporation (NYSE:LEN) gained 4.22% to $51.07 per share. The company reported earnings of $0.79 per share in the second quarter, higher than the $0.64 per share expected by Wall Street analysts. Its sales increased 32% to $2.4 billion year-over-year.
The stock value of Monsanto (NYSE:MON) slid 5.71% to $106.34 per share. The company reported better than expected third-quarter earnings of 2.39 per share, but its $4.58 billion revenue disappointed investors. Analysts expected the company to post $2.07 per share on $4.61 billion revenue. Monsanto expected to deliver break-even results in the fourth quarter.