U.S. stocks slid amid concern corporate earnings will disappoint investors and after the International Monetary Fund cut growth forecasts. Oil surged as Mideast tensions flared; Treasuries rose and the euro weakened.
The Standard & Poor’s 500 Index decreased 1 percent to 1,441.49 at 4 p.m. in New York while the Stoxx Europe 600 Index lost 0.5 percent. The S&P GSCI gauge of 24 commodities was 1.6 percent higher as oil surged more than 3 percent after Turkey sent more weapons to the Syrian border. U.S. 10-year note yields dropped three basis points to 1.71 percent, while the dollar climbed versus 12 of its 16 major peers.
The U.S. third-quarter earnings season begins with Alcoa Inc. today, the fifth anniversary of the S&P 500’s record close at 1,565.15. The IMF said the world economy will grow 3.3 percent this year, the slowest pace since the 2009 recession, and 3.6 percent next year. The euro slid versus most major peer as a meeting between German Chancellor Angela Merkel and Greek Prime Minister Antonis Samaras failed to reassure investors an accord is imminent on Greece’s next aid installment.
“There’s so much pessimism over earnings that there’s room for upside with any positive surprise,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $170 billion, said in a telephone interview. “Overall I think traders are too pessimistic. Even with the IMF economic numbers we got, those are still pretty good numbers. The IMF is forecasting global growth next year will be above 3 percent. That’s probably higher than what most people are fearing at the moment.”
Apple Inc. pared an earlier plunge of 2.3 percent that extended its decline from a record $702.10 on Sept. 19 to more than 10 percent, or what is commonly referred to as a “correction.” Apple is likely to face “increasing challenges” as smartphone growth in developed markets slows, Nomura Securities International Inc. analyst Stuart Jeffrey said today.
Analysts’ average estimate for Apple’s fiscal fourth- quarter adjusted earnings have fallen as much as 15 percent this year to $8.92 a share from $10.55 in April, according to data compiled by Bloomberg. The company reports results on Oct. 25.
Technology shares in the S&P 500 were among the biggest drag among 10 groups. Intel Corp., the world’s largest semiconductor maker, slipped as Sanford C. Bernstein & Co. downgraded the shares. Edwards Lifesciences Corp. sank after saying preliminary third-quarter sales would be lower than forecast. Netflix Inc. tumbled after Bank of America Corp. lowered its rating to underperform.