Wall Street’s post-July 4th hangover is lingering for another day. It might be a big World Cup day, but in the stock market it’s “World Slump” day.
Here are the four things you need to know:
1. Bad start for stocks: All three major U.S. indexes are retreating. The Dow Jones Industrial Average lost over 100 points, while the Nasdaq slipped 1.4% and the S&P 500 was off 0.7%. There was a lot of excitement about the Dow cresting over 17,000 last week. Now it’s trading a notch above 16,000.
2. Earnings season is here! Aluminum producer Alcoa is scheduled to unveil its earnings after the closing bell, marking the start of the quarterly results season. Restaurant chain Bob Evans is also due to report after the close.
With the S&P 500 index already up 6% this year, investors will be looking closely to see whether corporate profits can support stocks and to what extent markets have been relying on cheap money from the Federal Reserve to push indexes to new records.
Second quarter earnings are expected to grow 4.9% compared to the same period last year, though that estimate is down from the 6.8% prediction at the start of the quarter, according to data from FactSet.
3. Stock movers: More drama at American Apparel: Shares of American Apparel were off after the struggling company warned it received a notice of default from a lender related to last month’s ouster of founder and CEO Dov Charney.
However, American Apparel disputed that default claim and is exploring ways to tap its revolving credit facility to repay the lender. Also, the New York Post reported American Apparel has reached a preliminary deal to transfer control of the board to a hedge fund aligned with Charney.
Also on the fashion front, Guess rallied after the retailer was upgraded by analysts at Piper Jaffray, who pointed to strength in the company’s European business.
Meanwhile, investors are seizing on shares of Groupon. The daily deals site moved slightly higher after it was upgraded to “buy” from “neutral” by B. Riley.
4. No help from overseas: European markets were weaker, with airline and banking stocks under pressure. Air France KLM cut its earnings forecast due to overcapacity on routes to North America and Asia. The major U.S. airlines, including Delta Air Lines, United Continental, and American Airlines Group, all dove.
Some bank stocks took a hit from a New York Times report saying Germany’s Commerzbank and Deutsche Bank are next in line for punishment by U.S. authorities. Sentiment was also soured by weaker than expected German export data for May.
Asian markets ended mixed.
South Korean-based Samsung warned that revenue and profit will fall in the second quarter as the company struggles to find new smartphone buyers in an already saturated market. The electronics maker warned that operating profit could fall to 7 trillion won ($6.9 billion) — a 26% decline from the previous year.
CNNMoney reporter Matt Egan contributed to this report.
