25/10/2014 22:58:29 Free Membership Login

U.S. Stocks Finish With Steep Losses as Political Concerns Weigh

Date : 11/15/2012 @ 3:23AM
Source : Dow Jones News

U.S. Stocks Finish With Steep Losses as Political Concerns Weigh

   By Jonathan Cheng 
 

U.S. stocks dropped to a fresh three-month low as growing political concerns in the U.S. and European economic weakness pushed the technology-heavy Nasdaq Composite into a correction.

The Dow Jones Industrial Average fell 185.23 points, or 1.45%, to 12570.95, one day after falling to its lowest level since late July. The Standard & Poor's 500-stock index lost 19.04 points, or 1.39%, to 1355.49, and the Nasdaq Composite shed 37.08 points, or 1.29%, to 2846.81.

Stocks started the day in positive territory but quickly gave those gains up to hand the Dow its fifth decline in the six sessions since Election Day. The blue-chip measure has lost nearly 5% over that span.

The Nasdaq's decline, meantime, brought its slide off its mid-September high to 10.6%, putting the index in a correction according to the generally-accepted definition of a fall of 10% or more from its recent peak. The Russell 2000 index of small-capitalization stocks suffered a similar fate, falling 2%, to 11% below its mid-September high.

All 10 sectors of the S&P 500 finished lower, dragged most heavily by industrial, financial and materials shares. Bank of America, General Electric and Home Depot led the Dow component laggards, each shedding 3% or more.

Some market watchers pointed to relatively weak economic data and fresh economic concerns in Europe to explain the selloff.

Also hurting market sentiment was a tough stance taken by President Barack Obama in the tense negotiations over U.S. deficit reduction. Unless politicians can reach a compromise, taxes are set to rise and government spending to fall in the new year, potentially pushing the U.S. into recession.

Late Tuesday, the president said he would seek $1.6 trillion in new tax revenue, far more than Republicans are likely to accept. At a press conference Wednesday afternoon, he underscored his position, which some market watchers feared could make for a more contentious environment with congressional Republicans ahead of the self-imposed Jan. 1 deadline.

"At every turn, Obama is going after a very aggressive line, and that has alarmed a lot of people," said Michael Shea, managing partner at Direct Access Partners. "The president clearly did not start the negotiations near the middle--he started them way out on one side, and you know the Republicans will have to come up with an equally far-out number."

In addition, investors kept an eye on the Middle East, after Hamas officials in the Gaza Strip said an Israeli airstrike killed the commander of its military wing. The news helped crude-oil futures reverse earlier losses to tack on 1.1%, to $86.32 a barrel.

"Sentiment has clearly turned in the face of some pretty substantial headwinds, like Europe flaring up, China slowing, U.S. uncertainty and some weakness in corporate profitability," said Beata Kirr, senior portfolio manager for Bernstein Global Wealth Management in Chicago.

Gains in some technology stocks mitigated the losses, after a strong earnings report from Cisco Systems, a Dow component. The network-equipment maker climbed 4.8% after its quarterly earnings and revenue exceeded analysts' expectations, helped by strength in its services business. Rival Juniper Networks benefited from Cisco's strong earnings, rising 1.2%.

However, Cisco's strong gain did little to help the price-weighted Dow, given the stock's low weighting on the blue-chip measure. The Cisco-related boost was more than offset by a decline at International Business Machines, which lost 1.5%.

In Europe, the Stoxx Europe 600 dropped 0.9% and London's FTSE 100 gave up 1.1% after downbeat economic data from the euro zone and the U.K. Both indexes finished at a five-week low.

Euro-zone industrial production for September fell 2.5%, the largest monthly decline since January 2009. In Portugal, economic growth fell 0.8% in the third quarter, for its eighth consecutive quarter of contraction, while Greece's third-quarter GDP fell 7.2% after contracting 6.3% in the second quarter.

The Bank of England said inflation rose at an annual rate of 2.7% in October, well above the target rate of 2%, prompting the central bank to freeze its bond-buying stimulus program in November.

Meantime, Italy auctioned off the maximum targeted amount of government bonds. Yields came in lower than at previous auctions.

Asian markets nudged higher, bouncing from a recent string of losses as the conclusion of China's 18th Party Congress helped to ease some investor uncertainty. Japan's Nikkei Stock Average inched up less than 0.1% to snap a seven-session losing streak, while China's Shanghai Composite rose 0.4%.

In U.S. economic news, retail sales dropped 0.3% in October as a result of the storm that hit much of the East Coast late that month. Economists had expected a 0.2% decline. Excluding autos, retail sales were flat, falling short of the 0.2% gain economists expected.

Wholesale prices fell 0.2% in October from the previous month, for the first drop in five months. Economists had expected a 0.2% increase.

Gold futures inched up 0.3% to $1,729.50 an ounce. The dollar lost ground against the euro but rallied strongly against the yen. Treasurys rose, sending the yield on the benchmark 10-year note down to 1.589%.

In other corporate news, Abercrombie & Fitch soared 34% after the teen-apparel retailer reported quarterly earnings and revenue that topped analyst forecasts, boosted by strong international and direct-to-consumer sales growth. Its full-year earnings outlook was also well above current projections.

Facebook jumped 13% even as investors positioned for the expiration of lockups that made about 804 million shares available for trading on Wednesday--nearly double the amount of the existing public float. Some market watchers said buyers jumped in when shares didn't initially fall.

Zynga gained 1.4% after the social games maker said its chief financial officer, David Wehner, was leaving the company to pursue a senior finance position at Facebook. The company also affirmed its 2012 financial outlook.

Advanced Micro Devices dropped 7.7% to lead the S&P 500 decliners after the company said it wasn't actively pursuing a sale of the company or significant assets.

Mosaic slumped 3.3% after the fertilizer company offered a less upbeat outlook on sales volume and prices for the current quarter, citing a decline in international demand.

Staples climbed 2.6% after quarterly earnings at the retailer of office supplies came in better than expected.

Iamgold declined 19% after the miner's quarterly earnings and revenue missed forecasts amid a drop in gold sales.

Write to Jonathan Cheng at jonathan.cheng@wsj.com



Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.

NYSE and AMEX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

1 site:2 in 141025 22:58