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More profit warnings hit Wall Street
1 of 6. Traders work on the floor of the New York Stock Exchange, July 10, 2012.
Credit: Reuters/Brendan McDermid
NEW YORK |
NEW YORK (Reuters) - Stocks fell for a fourth day on Tuesday as more pessimism from companies compounded worries the sluggish world economy is taking a toll on profit growth.
A sales warning from engine maker Cummins Inc (CMI.N) came on top of earlier weak forecasts from chipmakers Applied Materials Inc (AMAT.O) and Advanced Micro Devices (AMD.N), causing the market to extend losses in afternoon trading.
The news sent the S&P 500 down for a fourth consecutive day, the index's longest downward streak since May when it fell for six straight days.
Shares of industrials .GSPI fell the most at 1.6 percent. Cummins was among the biggest losers, declining 8.9 percent to $86.91.
"The selloff really started with Cummins," said Ryan Detrick, technical analyst at Schaeffer's Investment Research, in Cincinnati. It was "basically reiterating the concerns that we've had going into earnings, like how the European issues are really starting to have an impact on the U.S."
Recent data showing slower growth in Europe, China and the United States has weighed on the stock market, while U.S. companies have warned about overseas weakness and a stronger dollar hurting companies that rely heavily on exports.
Alcoa Inc (AA.N), which kicked off the earnings period, fell 4.1 percent to $8.40, a day after it reported a quarterly loss and lower sales.
The S&P 500 ended at technical support, which is seen in the 1,340-1,345 range, according to Robert Sluymer, analyst at RBC Capital Markets in New York. The 50-day moving average at 1,337 is also eyed as support where clusters of buying would be expected.
The Dow Jones industrial average .DJI was down 83.17 points, or 0.65 percent, at 12,653.12. The Standard & Poor's 500 Index .SPX was down 10.99 points, or 0.81 percent, at 1,341.47. The Nasdaq Composite Index .IXIC was down 29.44 points, or 1.00 percent, at 2,902.33.
Bank stocks also declined, with the euro hitting a two-year low against the dollar amid uncertainty about progress in tackling the euro zone crisis. The KBW Bank index .BKX fell 0.9 percent.
Cummins cut its full-year sales forecast, citing weakness overseas and a stronger dollar.
Advanced Micro Devices tumbled 11.2 percent to $4.99 after the chipmaker slashed its outlook for second-quarter revenue following disappointing sales in China and Europe.
Applied Materials Inc lost 2.7 percent to $10.71 after the chip-equipment maker said it expects to miss its full-year estimates and its third-quarter results will be at the low end of its previous outlook. The PHLX semiconductor index .SOX fell 2 percent.
U.S.-listed shares of Research In Motion Ltd RIM.TORIMM.O fell 5 percent to $7.29 in U.S. trading. The BlackBerry maker's shareholders elected the company's slate of directors at its annual meeting - the first presided over by new Chief Executive Thorsten Heins, who faces an uphill battle to get the embattled company back on track.
Volume was lighter than average. About 6.22 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, compared with the year-to-date daily average of 6.85 billion shares.
Decliners beat advancers by a ratio of about 2 to 1 on both the NYSE and Nasdaq.
(Additional reporting by Angela Moon; Editing by Kenneth Barry)
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The US and EU needed something like the Works Progress Administration, Civilian Conservation Corps, and Army Corp of Engineers to create jobs for infrastructure projects that would provide jobs for workers with paychecks to become customers and taxpayers. The infrastructure projects would make purchases from suppliers, and the workers/customers would shop in stores. Suppliers and stores would need new workers with jobs and paychecks who would become customers and tax payers, so the circle would expand. The new infrastructure would improve the productivity of the US and EU to expand the recovery. The US and EU did not act on these recommendations, so the US and EU are going into another recession.
In 2011, the wildfires, heat, and drought forced the US to import food from China. China has had a massive, continent-sized irrigation plan since 2001 that should be complete by 2020 to 2025. In 2011, China reached its grain production target for 2020, 9 years early. Also, China stocks its rivers, streams, canals, ponds, lakes, and reservoirs with fish and fresh-water crustaceans, so the US imported frozen vegetables and canned fish from China (I have some in my kitchen.), and canned meat from Vietnam from a food processing facility built with technical assistance and investment from China. I have seen the meat in grocery stores. At one time, the US was the “bread basket of the world,” but this is no longer the case, and 2012 may be worse than 2011. The US needs to increase its capacity to produce food because it can once again become a commodity that will reduce US trade deficits.
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