U.S. stocks drop on bank margins as crops lead commodities lower

Management Pessimism

Earnings pessimism among U.S. companies is climbing to levels last seen when stocks were mired in bear markets. Over the last four weeks, the ratio of companies saying profits will trail estimates compared with those saying they will exceed them climbed to 4.3, according to 69 earnings previews compiled by Bloomberg. The rate matches peaks reached in February 2009 and October 2001, the data show.

The start of the earnings season has overshadowed recent better-than-estimated U.S. economic data, including a drop in the unemployment rate to 7.8 percent, according to a Labor Department report last week. The jobless rate has become a focal point in President Barack Obama’s bid for a second term. Vice President Joe Biden and Republican Paul Ryan each said in a TV debate yesterday that their parties’ proposals would bring the rate below 6 percent.

Commodities Retreat

The S&P GSCI Index retreated 1 percent as 19 of 24 commodities declined. Crude oil slipped 21 cents to $91.86 a barrel. Gasoline tumbled more than 3 percent in New York, dropping for a second day. Global refiners will process 400,000 barrels a day less crude in the fourth quarter because of plant halts and a lower demand outlook, the Paris-based International Energy Agency said in a monthly report today. Corn fell from a three-week high and soybeans declined after a government report showed slowing demand for supplies from the U.S., the world’s biggest grower and exporter.

Euro Trims Gain

The euro was stronger against 12 of 16 major peers while retreating from its high of the day of almost $1.30 against the dollar.

The 17-nation currency pared its advance and European stocks extended losses after Reuters reported that the European Stability Mechanism lacks the cash to bail out Spain if the country asks for help before the end of the year. However, guidelines obtained by Bloomberg News last month showed the fund has the authority to raise funds through the sale of fixed- income securities.

The Stoxx 600’s decline extended this week’s drop to 1.7 percent. The region’s equities fell for the fourth time in five days as International Monetary Fund Managing Director Christine Lagarde said global growth is not fast enough to curb unemployment, and Chinese new lending missed estimates.

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