Stocks on Wall Street opened lower on Wednesday as another round of the quarterly earnings season started with Alcoa warning of slower consumption of aluminum, which underscores the widespread concern over growth worldwide.
Other large businesses such as Chevron and Cummins Inc, the engine maker, also warned over slow growth. Alcoa said that stronger demand from producers of autos and airplanes help the largest aluminum producer in the U.S. to report results from the third quarter that were better than Wall Street expectations. Nevertheless, Alcoa shares were down 1.6% in premarket trading.
Third quarter earnings are expected to be less due to a lackluster level for growth in China, the second largest economy in the world. Profit forecasts are expected to be dented as China feels the pinch of the euro zone debt crisis. The euro zone is one of the key trading partners with China.
Earlier this week, the growth forecast from the World Bank was cut for East Asia over concerns that the slowdown in China might last longer than what was first expected.
According to financial data through the end of the day on Tuesday, 94 companies in the S&P Index have issued outlooks that are negative, compared to just 22 who have made pre-announcements that were positive. That is the weakest since 2001’s third quarter.
One company going against the general trend was Yum Brands. It gained close to 5% in premarket trading to $69.20. The parent company of KFC increased its outlook for the full year after its sales in China did not decrease, despite the cooling economy in the nation.