Stocks overnight: Musk sinks, Kanye's slavery comments weigh on Adidas

Kanye West's controversial comments about slavery have caused enormous media fallout this week. Photo/123RF.

Wall Street slid as the latest corporate earnings including from AIG failed to impress investors a day after the Federal Reserve kept alive bets that policy makers will lift their target interest rate next month.

"It's definitely rate hikes and tariffs, and the sense that earnings have peaked," Paul Brigandi, head of trading at Direxion Funds in New York, told Reuters.

Shares of AIG slumped, down 6.1 percent as of 1.52pm in New York, after the insurance company's quarterly results disappointed, underpinning concern about the progress of its restructuring efforts.

Wall Street moved lower. In 1.24pm trading in New York, the Dow Jones Industrial Average fell 0.2 percent, while the Nasdaq Composite Index retreated 0.3 percent. In 1.10pm trading, the Standard & Poor's 500 Index declined 0.5 percent.

The Dow fell as declines in shares of Nike and those of Goldman Sachs, recently down 1.7 percent and 1.5 percent respectively, outweighed gains in shares of Boeing and those of Cisco, recently each up 1.4 percent.

Shares of Tesla sank after CEO Elon Musk, during a conference call, declined to answer some analysts' questions, including about profit and capital requirements, saying that "boring bonehead questions are not cool."

Both analysts and investors were unimpressed. Tesla traded 6 percent weaker at US$282.99 as of 1.36pm in New York after dropping as low as US$275.23 earlier in the day.

"Irrespective of the Tesla CEO's annoyance with the genre of questions he was receiving ... an important part of Tesla's success has been its relationship with the capital markets in funding its ambitious plans," Morgan Stanley's Adam Jonas wrote in a note to clients, according to Reuters.

"The analysts on the call represent the providers of capital that Tesla has throughout its history depended upon," Jonas noted.

Also weighing on sentiment are trade talks between the US and China.

"With the lack of a group going in advance to actually work out the details, and with a divided administration on some of the things they're even looking for, I think that investors are realising there won't be any progress now, but are still hopeful for the future," Kate Warne, investment strategist at Edward D Jones & Co, told Bloomberg.

US Treasuries rose, pushing the yield on the 10-year note two basis points lower to 2.94 percent.

It wasn't all bad news, however. Shares of Kellogg rose, up 2.5 percent as of 1.44pm in New York, after the company posted quarterly revenue that exceeded expectations amid increased appetite for its Pringles and frozen foods brands including Eggo and MorningStar Farms.

"US cereal remains a challenge ... but we were pleased to see signs of stabilisation with declines lessening from last quarter," Edward Jones analyst Brittany Weissman said, Reuters reported.

In Europe, the Stoxx 600 Index finished the session with a 0.7 percent decline from the previous close. France's CAC 40 Index slid 0.5 percent, as did the UK's FTSE 100 Index, while Germany's DAX index dropped 0.9 percent.

A 5.9 percent slump in Adidas shares in Frankfurt led the DAX lower.

Adidas Chief Executive Officer Kasper Rorsted distanced himself from comments about slavery by Kanye West but said the company has not discussed dropping the rapper as a designer, Bloomberg reported.

West is very important to the German sportswear maker's strategy, the CEO said in the interview after the company reported quarterly sales, according to Bloomberg.

- BusinessDesk