U.S. stocks drop on default concern amid debt-limit deadlock

Banks Retreat

The KBW Bank Index sank 1.4% as all its 24 members retreated. Bank of America dropped 1.4% to $13.85. Wells Fargo, the largest U.S. home lender, lost 1% to $40.87.

Alcoa slid 1% to $7.88 as Morgan Stanley analyst Paretosh Misra downgraded the shares to equal-weight from overweight, citing a weaker outlook for aluminum prices. Alcoa’s profit probably doubled during the quarter to 6 cents a share amid higher demand from the aircraft and automotive industries, according to analysts’ estimates compiled by Bloomberg.

Cooper Tire tumbled 13% to $25.72. Apollo Tyres is seeking to cut offer to buy Cooper after U.S. and Chinese workers challenged the takeover plan. Cooper acknowledged the $35-a-share offer should be reduced and that “the issue now is by how much,” Gurgaon, India-based Apollo said.

International Business Machines Corp. slipped 0.9% to $182.51. Barclays Plc cut its recommendation on the world’s largest computer-services provider to equal-weight, or hold, from overweight, citing concern that IBM’s cash flow may be affected as customers move to online-based software.

Qualcomm Downgrade

Qualcomm Inc. dropped 0.7% to $67.55. Tal Liani, an analyst with Bank of America Corp., cut the rating on the largest U.S. wireless equipment maker to neutral from buy, citing a potential “significant deceleration” in revenue and earnings growth over the next two years amid a slowdown in the smartphone market.

Time Warner Cable Inc. fell 0.9% to $111.76. The second-largest U.S. cable company agreed to buy fiber-optic network provider DukeNet Communications LLC for $600 million in cash. Time Warner Cable plans to use DukeNet to expand its business services in seven Southeastern states, including North and South Carolina.

Apple climbed 1.6% to $490.65. Peter Misek, an analyst with Jefferies, raised the stock’s rating to buy from hold, citing suppliers becoming more lenient on price.

Demand for iPhone 5 remains solid and expectations for iPhone sales are “conservative,” Timothy Arcuri, an analyst with Cowen & Co., said in a note to clients.


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