Stocks slide on growth worries


NEW YORK: US stocks fell on Friday as worries about slower economic growth hit shares of industrial companies such as Caterpillar Inc and disappointing news from chip makers pulled tech stocks lower. 

A report showing a larger than expected rise in business inventories added to concerns about the economic outlook, overshadowing a separate report that showed a stronger than expected jump in July retail sales. 

Shares of Caterpillar, a maker of heavy equipment, fell 1.9%, or US$1.29, to US$67.03 and led the Dow’s decline, while shares of industrial conglomerate United Technologies Corp dropped 0.5%, or 30 cents, to close at US$60.15 on the New York Stock Exchange. 

Semiconductor stocks, also considered a growth gauge, sold off a day after chip maker Analog Devices Inc posted a quarterly sales shortfall and gave a disappointing outlook. The Philadelphia Semiconductor Index fell 2.3%, its biggest drop in three weeks. 

“We are on potential recession watch,” said Barry Hyman, equity market strategist at EKN Financial Services Inc in New York. 

The Dow Jones industrial average shed 36.34 points, or 0.33%, to end at 11,088.03. The Standard & Poor’s 500 Index declined 5.07 points, or 0.40%, to finish at 1,266.74. The Nasdaq Composite Index dropped 14.03 points, or 0.68%, to close at 2,057.71. 

For the week, stocks fell, with the Dow down 1.37%, the S&P 500 losing 0.99% and the Nasdaq off 1.31%. 

Both the Dow and the S&P 500 snapped a three-week winning streak, while the Nasdaq registered its second straight week of declines. 

A change this week in Federal Reserve interest rate policy has left investors uncertain, said Bruce Zaro, chief technical strategist at Delta Global Advisors Inc, in Plymouth, Massachusetts. 

“In investor’s minds, the question is: ‘Why is the Fed stopping? Are they looking at their crystal ball and seeing a recession?’ Economic bellwether stocks have really had a tough time,” Zaro said. 

On Tuesday, the Fed’s policymakers decided to keep the fed funds rate steady at 5.25%, the first pause in a string of 17 interest rate hikes since June 2004, but they left the door open to future rate increases. 

The financial services sector was among the worst performers in the S&P 500. Shares of Citigroup Inc, the world’s biggest financial services company, fell 0.7%, or 33 cents, to end at US$47.64 on the NYSE. 

Analysts said investors were concerned that a resumption in the Fed’s interest rate hiking campaign could dim the outlook for corporate profits, along with near record crude oil prices. 

On Friday, US crude oil for September delivery rose 35 cents to settle at US$74.35, not far below a record US$78.40 set on July 14. 

On Nasdaq, shares of Intel Corp, the world’s biggest chip maker, dropped 1.9%, or 34 cents, to US$17.41 and topped the S&P 500’s biggest losers. Intel also was among the heaviest weights on the bluechip Dow average. 

Shares of wireless chip developer Qualcomm Inc dropped 1.7%, or 59 cents, to US$33.31. They were the biggest weight on the Nasdaq 100. 

The stock of Apple Computer Inc fell 0.7%, or 42 cents, to US$63.65 and also dragged on the Nasdaq. 

Apple, the maker of iPod digital music players and Mac computers, said it was delaying results as it reviews irregularities related to some past stock options grants. 

On Friday morning, the Commerce Department said US business inventories rose a greater than expected 0.8% in June. Earlier, before Wall Street’s opening bell, the Commerce Department said July retail sales rose 1.4% exceeding the gain of 0.8% expected by economists polled by Reuters. 

Rising inventories can either signal business confidence in future demand or result from an unexpected decline in sales, causing involuntary stock building. 

Volume was light on the NYSE, where about 1.32 billion shares changed hands, below last year’s daily average of 1.61 billion. 

On the Nasdaq, about 1.46 billion shares traded, below last year’s daily average of about 1.80 billion. 

Decliners outnumbered advancers by a ratio of about 2 to 1 on both the NYSE and the Nasdaq. – Reuters  

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
   

Did you find this article insightful?

Yes
No

Next In Business News

Geely Auto and Volvo Cars to launch powertrain venture after merger scrapped
Malaysia Airlines to introduce digital travel health pass
Rising aluminium prices lift Press Metal profits�
AEON Malaysia registers RM41.4mil net profit in FY20
AirAsia takes RM320mil hit due to Japan unit bankruptcy
Destini, KTMB in joint venture targeting rail MRO services
DRB-Hicom makes a net profit of RM554mil in FY20
Sunway joins global push for climate-related financial disclosures
Vitrox to expand capacity as Q4 revenue surges to new high�
Strong demand for steel products powers Prestar’s earnings

Stories You'll Enjoy


Vouchers