* U.S., European factory sectors improve, China's
* German Bunds, U.S. Treasuries fall in price on strong data
* Upbeat Apple earnings boost U.S., European tech stocks
* AT&T, Caterpillar results miss forecast, cools Wall Street
By Richard Leong
NEW YORK, July 24 U.S. stock prices fell on
Wednesday, retreating further from their record highs on
disappointing results from several top companies, while
stronger-than-expected U.S. and European factory data spurred
selling in safe-haven U.S. and German government debt, sending
their yields higher.
Poor earnings from Caterpillar and AT&T overshadowed robust
earnings from iPad and iPhone maker Apple and data showing a
pick-up in U.S. manufacturing and new home sales.
Still, neither the Dow nor S&P 500 were far below the
intraday record highs they set on Tuesday, while global stock
prices, tracked by MSCI, lingered at a near five-year high.
"The earnings season so far has been pretty good for most
companies. Investors anticipated good numbers and they got them,
although the forecasts haven't been necessarily strong enough to
push the market higher," said Rick Meckler, president of
LibertyView Capital Management in Jersey City, New Jersey.
"I think the market now stands at a point where you are
going to need good economic numbers to really move higher."
News of a surprise improvement in U.S. and European factory
activity offset further signs China's economy is cooling. Data
showing the Chinese manufacturing sector contracting for a third
straight month spurred selling in oil.
Better outlooks for the United States and Europe supported
the dollar and euro, while gold snapped its four-day winning
streak on profit-taking.
Initial estimates of manufacturing activity across the
17-nation euro zone currency bloc showed the region on course to
end its 18-month old recession, led by a surge in activity in
German and French factories.
Across the Atlantic, Markit's "flash" U.S. Manufacturing
Purchasing Managers Index rose to 53.2, a four-month high, while
output also was at its strongest since March.
Investor sentiment was also boosted by a U.S. government
report showing that new home sales rose to a five-year high in
June even in the wake of higher mortgage rates.
The encouraging data from the United States and Europe
offset worrisome news from China. A survey of its vast
manufacturing sector showed Chinese activity slowed to an
11-month low in July, suggesting the world's second-biggest
economy was still losing momentum.
After opening higher, U.S. blue-chip stocks turned lower,
while the Nasdaq Composite Index struggled to stay in positive
In mid-afternoon trading, the Dow Jones industrial average
was down 51.84 points, or 0.33 percent, at 15,515.90. The
Standard & Poor's 500 Index was down 8.13 points, or 0.48
percent, at 1,684.26. The Nasdaq Composite Index was
down 1.84 points, or 0.05 percent, at 3,577.43.
Shares of heavy equipment maker Caterpillar fell 2.8
percent to $83.12 after it reported lower quarterly profits and
reduced its outlook for full-year earnings.
AT&T stock shed 1.5 percent to $35.28 after the No. 2
U.S. mobile service provider posted quarterly profits that fell
short of expectations despite better-than-expected revenues.
Caterpillar and AT&T are components of the Dow and S&P 500.
Unlike their U.S. counterparts, European shares clung to
gains. Europe's broad FTSEurofirst 300 index ended up
0.6 percent at 1,214.63. It had risen nearly 1 percent earlier
due to a 0.9 percent rise in technology stocks on the
back of Apple's forecast-beating results posted after
the U.S. market closed on Tuesday. Apple shares were up 6
percent at $443.86, their highest level since June 10.
MSCI's world equity index was down 0.25
percent on the day at 375.09, held back partly due to weakness
in Asian shares on concerns over China's outlook and a
subsequent downturn on Wall Street from its record highs.
The better prospects for the U.S. economy supported the
greenback, which rose 0.8 percent to a tad above 100 yen,
moving away from a one-week low of 99.13 yen touched on Tuesday.
The dollar index rebounded after skidding to a
one-month low of 81.926 on Tuesday. It was last up 0.42 percent
A stronger dollar stoked profit-taking in gold, which hit a
one-month high earlier this week. Spot bullion prices
fell 2.1 percent at $1,318.70 an ounce.
The latest euro zone factory data sent the euro to a
one-month high against the dollar past $1.3256 before
buying faded. The single currency was last down 0.2 percent at
The improved outlook for the United States and Europe
reduced the safe-haven appeal of low-risk Treasuries and Bunds.
Benchmark U.S. 10-year government notes fell
22/32 in price to yield 2.590 percent, the highest level in
about 1-1/2 weeks, while German Bund futures were down
more than 1 point at 142.57, the lowest in two weeks.
In the oil market, traders were focused on the weak Chinese
data as the world's No. 2 economy has been a major importer of
raw materials, supporting prices in recent years.
Brent oil settled $1.23 or 1.13 percent lower at
$107.19 a barrel and U.S. crude finished $1.84 or 1.72
percent lower at $105.39.
"People are worried about the growth story from China is not
as good as it used to be," said Jason Pride, director of
investment strategy at Glenmede in Philadelphia.