October 23, 2012 / 7:26 PM / 5 years ago

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

* Euro falls to 1-week low versus dollar
    * About 63 percent of S&P companies miss revenue
expectations
    * Moody's downgrade of Spanish regions weighs on sentiment


    By Angela Moon
    NEW YORK, Oct 23 (Reuters) - Global shares slipped more than
1 percent 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 and the S&P 500 stock indexes were off more than 1
percent 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.
    "The market has gone from taking a macro view focused on the
EU and China to focusing on earnings, and the earnings are
disappointing," said Timothy Hoyle, director of research for
Haverford Investments in Radnor, Pennsylvania.
    "We expected earnings to be flat to down a few percent, but
we did not anticipate the fact that the third quarter got
progressively weaker for many companies."
    The Dow Jones industrial average was down 208.46
points, or 1.56 percent, at 13,137.43. The Standard & Poor's 500
Index  was down 16.29 points, or 1.14 percent, at
1,417.53. The Nasdaq Composite Index  was down 15.72
points, or 0.52 percent, at 3,001.24.
    Apple Inc took the wraps off an 8-inch tablet on
Tuesday in its biggest product move since debuting the iPad two
years ago. Its 7.9-inch "iPad mini" marks Apple's first foray
into the smaller tablet segment. Apple's shares were down 2.3
percent at $619.50 in a day of very volatile trade.
    Global shares were down 1.4 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 points, 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.
    On Tuesday, 33 S&P 500 companies are due to report earnings,
including Netflix and Harley-Davidson. Facebook
Inc is also scheduled to report after the bell.
    
    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.
    "But despite the latest flare-up in worries about debt and
growth in the euro region, the single currency may see its
downside somewhat cushioned by expectations Spain may be weeks
away from requesting an international bailout, allowing the
country to tap the ECB's bond buying program to bring meaningful
debt relief," he said.
    
    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 at the meeting, 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 $1.09 to $108.36
per 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
14/32 in price, with the yield at 1.7642 percent.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below