Stocks lower on weak outlook for 3Q, Asia's economy
Investors looked warily at forecasts for poor corporate earnings and weaker growth in Asia and decided there wasn't much reason to buy stocks.
The Dow Jones industrial average gave up 26.50 points to close at 13,583.65 points Monday. The Standard & Poor's 500 index fell 5.05 points to 1,455.88, and the Nasdaq composite lost 23.84 points to 3,112.35.
Companies in the S&P 500 index are expected to post an overall decline in profits for the first time in 11 quarters, according to FactSet. The third-quarter earnings season will start on Tuesday when aluminum maker Alcoa releases its results.
Tuesday will mark the five-year anniversary of the highs of the Dow and the S&P 500. The S&P, a benchmark tracked by many mutual funds, is about 7 percent below its high. The Dow is about 4 percent below its peak.
Stocks have been on a strong run, with the Dow up 11 percent this year, the S&P 500 nearly 16 percent. But Asia's slowdown, Europe's problems and now forecasts of weak U.S. corporate earnings have caused some investors to wonder whether the stock market has risen too far, too fast.
On top of those concerns, some market leaders such as Apple have been falling in recent days, noted Bob Pavlik, chief market strategist at Banyan Partners LLC.
“It sort of leads folks into thinking, ‘Why don't I take a little bit of profit off the table, put it away,'” and maybe re-invest it if third-quarter results turn out to be higher than expected, he said.
Apple closed above $700 on Sept. 18 but has been declining since then. On Monday, it fell $14.42 to $638.17.
Also on Monday, the World Bank warned that a “more pronounced slowdown” is possible in China, the world's second-largest economy.
It cut its overall growth forecast for developing countries in Asia.
Slower growth in Asia could drag down the U.S. economy. One of the few bright points for the United States during the recession was tremendous growth in export demand by developing nations in Asia and other regions.
While the U.S. economy isn't doing badly, investors have been counting on growth in Asia for help, said Rex Macey, chief investment officer at Wilmington Trust Investment Advisors. “There was a point where we said ‘Thank goodness for Asia and China. Their growth can fuel the recovery.” That's not so clear anymore, he said.
Stocks and industries that depend most heavily on U.S. economic growth were among the biggest losers Monday. Intel fell 17 cents to $22.51. Home Depot fell $1.32 to $61.88, and Walt Disney lost 64 cents to $52.33.
Wal-Mart Stores and American Express shares didn't move much after they announced a reloadable prepaid card with no recurring or overdraft fees. But the news hammered shares of prepaid card competitor Green Dot Corp., which has offered a card with Wal-Mart. Green Dot fell $2.60, or 20 percent, to $10.25.
UnitedHealth Group rose 47 cents to $57.60 after the health insurer said it would pay $4.9 billion in cash to buy most of Brazilian health benefits and hospital services provider Amil Participacoes.
Truck and engine maker Navistar rose $1.60, or 8 percent, to $22.81 after saying it will add two board members associated with activist investors, heading off a proxy battle.
European markets closed lower. France's CAC-40 fell 1.5 percent, Germany's DAX fell 1.4 percent, and Britain's FTSE 100 lost 0.5 percent.
U.S. government bond trading was closed for Columbus Day.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Highmark and UMPC feud over canceled physician contracts
- Health insurers’ move toward ‘high-value’ care providers may reduce choice
- Variable-rate electricity contracts in Pennsylvania can cost customers plenty
- Beaver Valley plant readies nuclear waste storage area
- Wilkins woman leads PNC’s multicultural marketing efforts
- Laptops, TVs will be big on Black Friday
- Drone experiments test applications for farming
- McConnell confident Democrats will join coal emissions fight
- Kennametal names replacement for retiring CEO
- U.S. Steel reorganizes operating units
- Fliers get no share of fuel cuts