GLOBAL MARKETS-Stocks, euro falter on lackluster earnings, Spain

Tue Oct 23, 2012 4:36pm EDT

* Wall St hit by lackluster earnings results; Dow posts
biggest drop since June
    * Euro falls to 1-week low versus dollar
    * Moody's downgrade of Spanish regions weighs on sentiment


    By Angela Moon
    NEW YORK, Oct 23 (Reuters) - Global shares tumbled and the
euro hit a one-week low versus the dollar on Tuesday after weak
U.S. corporate earnings results and downgrades of several
indebted regions of Spain raised concerns about the global
economy.
    The Dow Jones industrial average posted its biggest point
drop since June, shedding over 240 points, as large
multinational companies including Dupont and United
Technologies reported disappointing profits and earnings
outlooks.
    The euro fell as low as $1.2950, its lowest level
against the dollar since Oct. 16. It last traded at $1.2964,
down 0.7 percent on the day. The euro also dropped against the
yen as Spain's borrowing costs spiked after rating
agency Moody's downgraded five of the country's regions,
including economically important but deeply indebted Catalonia.
    The decline in U.S. stock prices was broad, with all 10 of
the S&P 500's sectors down. Dupont shares fell 9.1 percent to
$45.23 after the chemical maker slashed its earnings forecast
and reported disappointing quarterly results.
    "We've had a series of misses, topped off by DuPont's pretty
dismal earnings this morning," said Bruce Zaro, chief technical
strategist at Delta Global Asset Management in Boston.
    "Expectations were low and results have been coming in
generally lower, and that's why we're seeing weakness here," he
said. Zaro sees the S&P possibly falling as low as the 1,390 to
1,400 range in the near term.   
    The Dow Jones industrial average ended down 243.36
points, or 1.82 percent, at 13,102.53. The Standard & Poor's 500
Index  finished down 20.71 points, or 1.44 percent, at
1,413.11. The Nasdaq Composite Index  closed down 26.49
points, or 0.88 percent, at 2,990.46.
    Apple Inc took the wraps off a 7.9-inch tablet on
Tuesday in its biggest product move since debuting the iPad two
years ago. Its "iPad mini" marks Apple's first foray into the
smaller tablet segment. Apple's shares were down 3.3 percent at
$613.35 in a day of very volatile trade.
    Global shares fell 1.5 percent.
    In Europe, the FTSEurofirst 300 index ended down
1.7 percent at 1,088.71, its lowest close since Sept. 5.
    The euro zone's blue-chip Euro STOXX 50 index 
fell 2.1 percent to 2,477.92, while the Euro STOXX 50 implied
volatility index rose 10 percent, highlighting
investors' concerns over the market outlook.
    Tuesday was the worst day for euro zone stocks and the
biggest rise for implied volatility since Sept. 26, when violent
anti-austerity protests hit Spain and Greece. 
    On Wall Street, the Dow and the S&P 500 indexes have given
up all of their gains since the European Central Bank's Sept 6.
announcement of a plan to buy bonds of troubled euro zone
nations.
    The S&P 500 was below its 50-day moving average of about
1,434, which had been a level of support and may now act as
resistance if the market is able to rebound.
    
    U.S. EARNINGS DISAPPOINT
    A total of 145 of the S&P 500 companies have reported
results so far. Sixty-three percent have missed analysts' 
expectations for revenue. By contrast, since 1994 an average of
62 percent of companies have exceeded estimates. Over the past
four quarters 55 percent of companies have beaten.
    Overall earnings for S&P 500 stock index companies are
expected to fall 2.5 percent in the third quarter from a year
ago.
    After the bell, Facebook Inc said its revenue rose 32
percent in the third quarter to $1.26 billion. The world's No.1
online social network firm posted revenue of $954 million in the
year-ago period. The stock rose 3.6 percent in
extended trade.
    Also after the bell, Video rental service Netflix Inc
 posted a third-quarter profit as the addition of new
streaming subscribers in the United States lifted revenue. But
the stock fell 15 percent in extended trade.
    
    SPAIN'S ECONOMY CONTRACTS AGAIN
    In other European news, the Spanish economy, the fourth
largest in the euro zone, contracted in the third quarter.
according to the country's central bank. 
    The euro plunged versus the yen and hit a one-week low
versus the dollar.
    Financial markets are still waiting for a fiscal bailout
request from Spain to trigger the European Central Bank's new
bond-buying program, which many believe would draw a line under
any threat of default from the euro zone's fourth-largest
economy.
    Yves Mersch, who has been nominated to serve on the ECB's
Executive Board, told an audience in Berlin that while there was
no limit to the amount of bonds the ECB could buy, there was a
time limit. 
    Shortly before he spoke, Spain sold short-term debt, with
yields rising slightly on three-month paper and falling on
six-month paper. 
    Meanwhile, data showed business morale in France's
manufacturing sector slumped to its lowest in over two
years. 
    The data fueled fears that France, the euro zone's
second-largest economy, may be on the brink of a recession,
according to Joe Manimbo, senior market analyst, Western Union
Business Solutions in Washington D.C.
    
    BERNANKE ERA MAY BE CLOSING 
    In the United State, the Federal Reserve's policy committee
began a two-day meeting on Tuesday. 
    The Federal Open Market Committee is likely to hold off from
taking fresh steps, opting to review the impact of the
significant action it took last month and keep a low profile in
its last gathering before the Nov. 6 elections. 
    The New York Times reported Fed Chairman Ben Bernanke has
told close friends he probably will not stand for a third term
at the U.S. central bank even if President Barack Obama wins the
Nov. 6 election. 
    Oil prices fell as commodity and equity prices were
pressured by concerns about slowing global economic growth.
Brent crude for December delivery fell $1.19, or 1.09
percent, to settle at $108.25 a barrel. U.S. December crude
 settled down $1.98, or 2.23 percent, at $86.67 a barrel.
    The benchmark 10-year U.S. Treasury note was up
16/32 in price, with the yield at 1.759 percent.