Stocks, commodities and the euro fell as concern about U.S. corporate profits grew and European finance ministers met to discuss the region’s debt crisis. The yen rose and Chinese shares slid as the World Bank forecast slowing growth in East Asia.
The Standard & Poor’s 500 Index lost 0.3 percent to 1,455.88 at 4 p.m. in New York and the Dow Jones Industrial Average fell from an almost five-year high. The euro weakened against 12 of 16 major peers and the yen gained versus all 16, while the rand dropped to the lowest since April 2009. China’s yuan touched the highest level since 1993, while the Shanghai Composite Index slipped on the first trading day after a week’s holiday. Zinc, gasoline and silver led commodities lower.
Alcoa Inc. unofficially starts the earnings season with its results tomorrow, the fifth anniversary of the record highs in the S&P 500 and Dow. European finance ministers are meeting in Luxembourg to discuss Spain’s finances and closer banking cooperation, while German Chancellor Angela Merkel visits Greece tomorrow for the first time since the crisis erupted. Growth in developing East Asia will probably slide to an 11-year low of 7.2 percent this year, the World Bank estimates.
“We’re back to dealing with the issues in Europe,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview today. His firm oversees $20 billion. “We’re going back to a period where investors become less enthusiastic as they realize the problems of the world have not gone away.”
Below $600 Billion
Trading of U.S. Treasuries was closed for the Columbus Day holiday, while Canadian markets were shut for Thanksgiving.
Among U.S. stocks, Apple Inc., the largest company, retreated 2.2 percent to $638.17 and fell below $600 billion in market value after rising above that threshold for the first time in August. The shares are down about 9 percent from their record closing level of $702.10 on Sept. 19. Foxconn Technology Group, the assembler of iPhones, stopped production for the second time in as many weeks as workers protested against increased pressure.
The S&P 500 pared last week’s 1.4 percent rally. Earnings at companies in the S&P 500 are projected to fall 1.7 percent in the third quarter in the first decline since 2009, according to analyst forecasts compiled by Bloomberg. Of the 500 companies in the benchmark gauge for U.S. equities, 26 have reported results so far, with profit falling an average 2.1 percent, data compiled by Bloomberg show.
“While recession in the U.S. is not necessarily imminent, earnings are weakening fairly quickly,” Gina Martin Adams, a Wells Fargo & Co. strategist, wrote in a note today. “Formerly strong export and investment sensitive sectors are suffering from economic and policy uncertainty, pressuring index earnings to the brink.”