Alcoa Inc (NYSE:AA) surprised Wall Street ahead of the open today by announcing results earlier than scheduled and that fell short of expectations. Alcoa Inc expected at $0.33 a share, missed analysts’ projections by $0.02 cents. Shares sank as much as 7% in pre-market activity, wiping out this year’s gain of 6.4% and then some. Investors had not expected to see the Q3 results until after the bell. The rest of Wall Street is reacting to the news and not in a positive way.
Alcoa will split into two entities ahead of the market opening on Nov. 1. The first company, keeping the Alcoa (NYSE:AA) name, will focus on the traditional smelting business. The other, Arconic, will specialize in higher-end aluminum and titanium alloys for the automotive, aerospace and construction industries.
The company lowered its full-year 2016 revenue targets across all areas of the business, which it said was due to near-term challenges, particularly in the aerospace industry.
“We are performing well despite the low pricing environment … demanding conditions on the commodity side as well as aero industry teething problems,” Alcoa Chief Executive Officer Klaus Kleinfeld told Reuters. “What you see shining through is that we have concentrated on what we can influence and you see our strong resilience.”
About 1:15 p.m. ET, the Dow Jones industrial average was down about 200 points, or 1.1%. The broad Standard & Poor’s 500 stock index was 1.2% lower and the Nasdaq composite, which kicks off Tuesday’s session within 0.2% of its record high, was down 1.4%.
The Dow last suffered a 200-point drop back on Sept. 13.
Also hurting the broader market was a dip in the price of U.S.-produced crude, which fell 65 cents, or 1.3% fall to $50.70 per barrel, putting the brakes on a big rally that has been fueled by hopes of an OPEC prodution cut
“Expectations were that we will finally get a quarter when we can be confident to say that earning season will give us a number which will make the foundation a little more stronger for the U.S. economy,” said Naeem Aslam, chief market analyst at Thinkmarkets.com. “But the number released from Alcoa was simply just a disaster and has made investors angry who are willing to liquidate their position.”