U.S. stocks fell, extending losses in the Standard & Poor’s 500 Index to a fourth day, as Alcoa Inc.’s forecast fueled concern over corporate earnings and global economic growth.
Alcoa, the largest U.S. aluminum producer, lost 4.1 percent after cutting its outlook for global demand for the metal. Chevron Corp. slid 4.3 percent after saying third-quarter earnings were “substantially” lower than the previous period. Wal-Mart Stores Inc. paced gains with consumer stocks, rising to a record price after saying it had a “very strong” back-to-school season and will add U.S. stores. Yum! Brands Inc. rallied 8.3 percent after profit beat analyst estimates.
The S&P 500 slipped 0.6 percent to 1,432.9 as of 2:55 p.m. in New York. The benchmark gauge fell 1 percent yesterday, and is down about 2 percent over four days. The Dow Jones Industrial Average lost 123.22 points, or 0.9 percent, to 13,350.31. Trading in S&P 500 companies was in line with the 30-day average at this time of day.
“The fear is that this is going to be a really bad earnings season,” Hank Smith, chief investment officer at Haverford Trust Co. in Radnor, Pennsylvania, said in a telephone interview. His firm oversees $6.5 billion in assets. “If S&P 500 earnings come in better than expectations, the markets are going to view that positively. We’re off to a good start but we’ve got a long way to go.”
Alcoa unofficially marked the start of a third-quarter earnings season that is forecast to show S&P 500 profits and sales fell in unison for the first time in three years, according to analysts’ estimates compiled by Bloomberg. Per- share earnings in the S&P 500 are projected to have dropped 1.7 percent after they were little changed in the second quarter. Sales may have slipped 0.6 percent, the data show.
Global equities slumped as China car sales unexpectedly shrank for the first time in eight months. French President Francois Hollande and Spanish Prime Minister Mariano Rajoy called on nations such as Germany to honor commitments on a banking union made at the European Council in June. The International Monetary Fund said European banks may need to shrink assets if policy makers fall short of pledges to stem the fiscal crisis.