Weak Earnings and Forecasts Weigh on Stocks

“As we look forward to the fourth quarter, we are doing so with a heightened sense of caution due to our belief that the overall macro environment is having a greater impact on retail traffic than we previously anticipated.”

– Williams Sonoma CEO Howard Lester (subscription required), on a conference call with analysts this morning

“…. we were disappointed to see sales weaken dramatically in September and October.  The combination of weak housing conditions, mortgage and credit market concerns, and rising fuel prices has clearly led to a challenging macroeconomic environment for customers.”

– JC Penney CEO Myron Ullman

“Applied executives told analysts that they expect revenue in the current quarter to fall 13% to 18% from the fourth period [ended Oct 28, 2007], and post earnings per share well below Wall Street estimates.  New orders are expected to decline 5% to 15% from the fourth quarter.”

– “Applied Materials Warns of Weakness” (subscription required), The Wall Street Journal, Thursday November 15

Weak reports and forecasts from retailers JC Penney (JCP) and Williams Sonoma (WSM) and semiconductor equipment manufacturer Applied Materials (AMAT) are weighing on stocks this morning.

Williams Sonoma reported a 5% increase in overall sales on a 1.1% increase in same store sales.  Same store sales at its flagship Williams Sonoma and Pottery Barn stores were up 0.3% (WSM FY 3Q Earnings Release).

They stuck to their fourth quarter forecast but said results would likely come in on the low end.

Shares are down about 4%.

JC Penney reported overall sales decreased 1.1% on a 3.5% decrease in same store sales (JCP FY 3Q Earnings Release).

The forecast going forward was again cautious.

Shares were off about 5%.

Applied Materials reported a 6% decrease in revenue and net income and an 18% decrease in new orders (AMAT FY 3Q Earnings Release).

The forecast was notably weak.

Shares were off 5% in the after hours yesterday, but are flat so far today.

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In other news, the BLS reported that the CPI was up .3% in October, with Core CPI up .2% (October CPI).

GE said that they had experienced losses in one of their institutional money market funds and would let investors redeem shares at 96 cents – rather than the standard $1 (subscription required).

Here’s how markets looked:

Dow: -.16%

S&P: -.51%

Nasdaq: -.38%

Russell: -1.25%

The Russell 2000, made up of smaller stocks more dependent on the US economy, is getting the worst of it.