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Broadgate: Market News 11/7

11 July 2012

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 came on top of earlier weak forecasts from chipmakers Applied Materials Inc and Advanced Micro Devices, 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 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, 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 was down 83.17 points, or 0.65 percent, at 12,653.12. The Standard & Poor’s 500 Index was down 10.99 points, or 0.81 percent, at 1,341.47. The Nasdaq Composite Index 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 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 fell 2 percent.

U.S.-listed shares of Research In Motion Ltd 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.

Commodities

Brent rose above $98 a barrel on Wednesday, recovering slightly from the previous session’s losses, ahead of U.S. inventory data that is expected to show crude stocks shrinking for a third week in the world’s largest oil consumer.

Brent crude for August delivery rose 30 cents to $98.27 a barrel by 0748 GMT, while U.S. crude was at $84.24, up 33 cents

Spot gold firmed on Wednesday, after posting its biggest one-day decline since late June as a meeting of euro zone finance ministers disappointed some investors looking for more progress on resolving the region’s debt crisis.

Spot gold gained 0.4 percent to $1,574.50 an ounce by 10.49 p.m. EDT On Tuesday, after losing 1.4 percent on Tuesday. The U.S. gold futures ontract for August delivery edged down 0.3 percent to $1,574.80

Currencies

The euro wallowed around two-year lows against the dollar on Wednesday as investors fretted about the outcome of a German court hearing on the euro zone’s bailout fund, the latest hurdle for policymakers as they try to tackle the region’s debt crisis.

The euro was changing hands at $1.2262, with Monday’s EBS two-year low of $1.2225 in sight, a break of which would open the way to a test of support at $1.20.

The euro fell to five-week low against the yen on EBS at 97.09 yen, and last traded at 97.27 yen.

The British pound was trading close to a 3-1/2-year high against the euro of 78.89 pence touched on Tuesday, with the common currency last at 78.98 pence.

The dollar last traded down slightly against the yen at 79.33 yen, as investors awaited the outcome of the Bank of Japan’s regular two-day policy meeting beginning this session.

The Australian dollar also traded near an all-time high against the single currency of A$1.1974 hit on Tuesday, and was last buying A$1.2010. Against the U.S. dollar, the Aussie rose 0.2 percent to $1.0205

The information set out herein has been obtained from various public sources and is by way of information only. Broadgate Financial can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.

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