Stocks drop with oil as dollar rebounds on global growth concern

‘Fed’s Credibility’

Economic research indicates that additional asset purchases are “unlikely to reduce long-term interest rates by a significant amount” and that lowering rates “by a few more basis points” won’t spur growth and hiring, said Plosser, who doesn’t have a vote on policy this year. The U.S. economy is growing “at a moderate pace” and probably will expand by about 3 percent in 2013 and 2014, he said.

“We are unlikely to see much benefit to growth or to employment from further asset purchases,” Plosser said in the text of a speech prepared for delivery today at the Fed bank in Philadelphia. “Conveying the idea that such action will have a substantive impact on labor markets and the speed of the recovery risks the Fed’s credibility.”

Both the S&P 500 and the Dow average are trading near their all-time highs of October 2007. The Dow needs to rise about 5.3 percent to reach its peak of 14,164.53, while the S&P 500 needs an increase of about 8.6 percent to reach its record of 1,565.15.

Earnings Outlooks

While more U.S. companies have lowered their earnings projections than raised them this month, there hasn’t been an acceleration in revisions as the third quarter comes to an end. For every one company that raised its estimates in the past 20 trading days, 1.9 cut theirs, according to data compiled by Bloomberg. The ratio has averaged 1.4 since Aug. 1, less than the 2.1 mean since 2000, Bloomberg data show. It’s down from the almost four-year high reached on July 23, when eight companies cut forecasts for every one that boosted them.

The euro slipped 0.2 percent to $1.2903 as it weakened against 12 of 16 major peers. Spain sold 4 billion euros ($5.2 billion) of three- and six-month bills, while demand dropped at the sale of Italy’s notes.

Greece faces a financing gap that won’t be solved by budget measures being discussed, International Monetary Fund Managing Director Christine Lagarde said yesterday. Nobel Prize-winning economist Joseph Stiglitz said euro members will have to share debts and speed the implementation of a banking union to prevent a situation in which “the whole system falls apart.”

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