This Is the Reason the S&P 500 Tumbled for a 2nd Straight Day

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

All the kings horses and all the kings men better come together to help put the U.S. economy back together again, or we could be in for some serious trouble come two months from now. With everyone's focus now shifted from the U.S. presidential election to the Congressional gridlock that threatens to raise taxes and dramatically reduce military spending on Jan. 1, investors are signaling a bleak outlook for stocks, in general, until this looming tax hike and spending cut is dealt with.

After tumbling more than 2% yesterday, the S&P 500 (INDEX: ^GSPC  ) shed another 17.02 points (-1.22%), to end at 1,377.51.

Weak quarterly earnings reports and updates are only adding to an already skittish market.

McDonald's (NYSE: MCD  ) , earlier today, reported its first same-store sales decline in more than nine years! Total same-store sales fell 1.8% versus the year-ago period, with the fast-food super chain noting increased competition and tepid European demand as the reason for the decline. It should be noted that U.S. same-store sales also fell 2.2%, proving that rising food costs, shrinking consumer spending, and its competitors mirroring its menu are indeed taking a bite out of McDonald's bottom line. Shares fell by 2% to a new 52-week low.

Natural and organic grocer Whole Foods Market (Nasdaq: WFM  ) also failed to impress investors with its full-year earnings forecast, falling 6% on the day. Although Whole Foods' quarterly report highlighted a 50% boost in net income, its full-year EPS guidance of $2.83-$2.87 fell short of the Street's projections of $2.91. Furthermore, these results don't include the company's expected impact from Hurricane Sandy. Whole Foods doesn't have a history of guiding aggressively but, along with McDonald's, this could be a clear indication of tighter consumer spending on the horizon.

In the telecom space, Windstream (Nasdaq: WIN  ) took the title of disaster du jour within the S&P 500, falling 10% to a three-year low, after disappointing on earnings for a third-straight quarter. Windstream recently purchased Paetec to boost its traditional phone business, but has needed to offer more promotion pricing to draw in customers, and has experienced slow growth in sales of connection to cell towers. Both factors are crushing margins and forced Windstream to lower its earnings expectations going forward, yet again.

If there was one bright spot to today's nasty tumble, it was Qualcomm (Nasdaq: QCOM  ) , which rose by 4% after reporting better-than-expected fourth-quarter results. Revenue for the quarter rose 18%, with net income shooting 16% higher, as demand for 3G and 4G LTE smartphone and tablets boosted demand for its mobile chips. Having supply deals with Apple for the iPad and iPhone, as well as numerous other deals with Samsung and other mobile device suppliers, Qualcomm's immediate future does indeed look very bright.

Headed to the dollar menu?
Is McDonald's disappointing same-store sales figure a sign that the golden arches are headed back to the dollar menu? Find out the answer to this question and much more by getting your copy of our latest premium research report on McDonald's. Packed with in-depth analysis on the opportunities and threats facing McDonald's – and complete with a year of regular updates – this report will give you the tools you need to make smart long-term investing decisions.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2103330, ~/Articles/ArticleHandler.aspx, 10/21/2016 11:39:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,074.39 -87.96 -0.48%
S&P 500 2,136.17 -5.17 -0.24%
NASD 5,250.60 8.77 0.17%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 11:23 AM
MCD $113.29 Up +2.72 +2.46%
McDonald's CAPS Rating: ***
QCOM $68.89 Up +1.55 +2.30%
Qualcomm CAPS Rating: ****
WIN $8.37 Up +0.01 +0.12%
Windstream CAPS Rating: **
WFM $28.08 Down -0.21 -0.74%
Whole Foods Market CAPS Rating: ****