Broadgate: Market News 10/10
10 October 2012
U.S. stocks fell on Tuesday, led by losses in technology after brokerage downgrades of Intel and other major companies as worries increased about third-quarter U.S. earnings.
Shares of Intel, the world’s largest semiconductor maker, lost 2.7 percent to $21.90 after negative reports by at least two brokerages. Robert W. Baird & Co cut its price target on the stock to $26 from $32, citing weak demand for notebooks.
The news triggered selling of large-cap technology shares, including Oracle and Apple. Microsoft shares lost 1.7 percent to $29.28 and ranked as the biggest drag on both the Nasdaq and the S&P 500.
“It’s a good bet that companies aren’t significantly expanding their tech projects at this point,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
Nine of the S&P 500’s 10 sectors fell, with energy the one gainer for the day as crude oil prices jumped on concerns of a supply disruption in the Middle East.
Earnings warnings have left investors cautious after a rally that has driven the S&P 500 up nearly 16 percent so far in 2012, lifting it to an almost five-year high.
Among other large multinationals that have warned about earnings, citing weak demand in Europe and China, are FedEx Corp, Caterpillar Inc and Hewlett-Packard Co.
“Stocks had a big move for the year. Now people are waiting for more clarity on third-quarter results and fourth-quarter guidance,” said Michael James, senior trader at Wedbush Morgan in Los Angeles.
Analysts expect quarterly earnings for S&P 500 companies to decline about 2.3 percent from the year-ago period, according to Thomson Reuters data.
At the close, the S&P 500 was 7.9 percent below its all-time closing high of 1,565.15, reached five years ago on this date.
The Dow Jones industrial average fell 110.12 points, or 0.81 percent, to 13,473.53 at the close. The S&P 500 lost 14.40 points, or 0.99 percent, to 1,441.48. The Nasdaq Composite dropped 47.33 points, or 1.52 percent, to close at 3,065.02.
About 5.8 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.53 billion shares.
More than three issues fell for every one that rose in the NYSE. On the Nasdaq, about seven stocks fell for every two that rose.
Dow component Alcoa Inc reported quarterly results after the bell and its stock rose to $9.20, adding to the slight gain during regular hours. Alcoa closed at $9.13, up 0.1 percent, or 1 cent.
Shares of Netflix slid 10.9 percent to $65.53, reversing Monday’s sharp gains after Bank of America Merrill Lynch cut the video streaming company’s stock to “underperform” from “buy.”
Chinese Internet company Baidu was also downgraded by Credit Suisse to “underperform” from “neutral.” Its shares shed 6.8 percent to $106.49.
A number of issues traded on U.S. stock exchanges experienced sudden, big moves on Tuesday before resuming normal trading in the latest case of erratic activity in the stock market.
Brent crude slipped near $114 on Wednesday after a jump of 2 percent the previous day, with a cloudy economic outlook offsetting fears about disruptions to Middle East oil supply as a conflict between Turkey and Syria escalated.
Brent crude had slipped 37 cents to $114.13 a barrel by 1.02 a.m. EDT, after a rise of 2.4 percent on Tuesday to its highest since September 18. U.S. crude fell 35 cents to $92.04 a barrel. The dollar index .DXY rose 0.13 percent.
Gold hovered above $1,760 an ounce on Wednesday after three consecutive sessions of losses, as a murky outlook for global growth buoyed the dollar, putting pressure on bullion.
Spot gold was trading flat at $1,763.64 an ounce by 0354 GMT, hovering above a 1-1/2 week low of $1,759.94 hit in the previous session. It had fallen 1.4 percent in the past three days — its sharpest three-day decline in more than two months.
U.S. gold was also little changed at $1,765.80.
The euro dropped to its lowest since the start of month against the d ollar and the yen on Wednesday, as investors shied away from risk on concerns about weak earnings in the United States due to a slowdown in global growth.
The euro slipped 0.3 percent to $1.2840, its lowest since Oct 1 and coming close to an important technical support of its 200-day average at $1.2822. Some traders say the market is likely to test that level to trigger more stop-loss orders.
The Aussie wa s quoted at 79 .75 yen, just above strong support around 79.50 yen.
Against the U.S. dollar, the Aussie fell 0.1 percent to $1.0200, above its three-month low of $1.0149 hit on Monday.
The dollar was little changed against the yen at 78.26 yen.
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