Stocks Slump as Coca-Cola Fizzle Suggests Consumer Slowdown
NEW YORK ( TheStreet) -- Major U.S. stock averages dropped Tuesday as Coca-Cola Company
Coca-cola retreated 1.9% to $40.23 after the soda giant reported sales that fell short of expectations. Revenue for the quarter totaled $12.75 billion compared to a consensus target of $12.95 billion. The company attributed softer results on difficult weather and economic conditions.
"It's absolutely all on Coke, unfortunately, it just is," said Brian Amidei, managing director at HighTower Palm Desert, in a phone interview. Amidei said the market was using Coca-Cola's earnings to determine "the temperature of the consumer."
Investors weighed an uptick in inflation ahead of Federal Reserve Chairman Ben Bernanke's scheduled appearance on Wednesday before a congressional committee.
The latest inflation report was doing little to dampen views that the Fed could announce a reduction in asset purchases in September. The consumer price index rose by a greater than expected 0.5% in June after rising 0.1% in May, according to the Bureau of Labor Statistics. Economists, on average, were expecting an increase of 0.3% in June, according to Thomson Reuters . Excluding food and energy costs, core prices advanced 0.2%, as expected, after rising by 0.2% in May.
Bernanke is slated to speak before the House Financial Services Committee in his semi-annual monetary policy report. Although his speech at the National Bureau of Economic Research in Cambridge, Mass. last week indicated continued easy monetary policy for some time to come, there remains the concern that tougher stances on policy might arise at the hearing matching views presented at the most recent gathering of the central bank's policymaking Federal Open Market Committee.
"We continue to anticipate healthy returns for the stock market this year," Robert Pavlik, the New York-based chief market strategist at Banyan Partners LLC wrote in a note. "Prior to reaching year-end we expect that short-term worries related to potential tapering by the Federal Reserve will combine with concerns related to China, Europe and an increase in gasoline to bring back market volatility." Banyan manages about $1.4 billion.
Diversified healthcare company Johnson & Johnson