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Stocks Tumble, Oil Slides to Three-Month Low on Economy

Photographer: Scott Eells/Bloomberg

A trader works on the floor of the New York Stock Exchange (NYSE). Close

A trader works on the floor of the New York Stock Exchange (NYSE).

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Photographer: Scott Eells/Bloomberg

A trader works on the floor of the New York Stock Exchange (NYSE).

Global stocks slumped the most since July and commodities erased this year’s gains as companies from DuPont Co. and 3M Co. to Alfa Laval AB reported earnings that spurred concern the economy is weakening. Oil slumped to a three-month low and Treasuries rose.

The MSCI All-Country World Index (MXWD) dropped 1.5 percent at 4 p.m. in New York and lost 2.8 percent in three sessions. The Standard & Poor’s 500 Index slid 1.4 percent to 1,413.11, the lowest since Sept. 5, and the Dow Jones Industrial Average tumbled 243.36 points, or 1.8 percent, in its biggest drop since June. The S&P GSCI gauge of commodities sank 1.4 percent. Gasoline fell for a ninth day. The euro fell 0.6 percent to $1.2980 as Spain’s 10-year bond yield rose 13 basis points after data showed the Spanish economy shrank for a fifth quarter.

DuPont, the most valuable U.S. chemical maker, said it will eliminate about 1,500 jobs and posted a smaller profit than analysts estimated, while 3M reduced its forecast amid slowing European and Asian growth. Alfa Laval, the world’s largest maker of heat exchangers, said demand in the fourth quarter may be slow. Of the 145 companies in the S&P 500 that reported results as of the start of trading today, 60 percent missed analysts’ sales estimates, according to data compiled by Bloomberg.

“The earnings season has not gone as well as many would like,” said Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York. “In general, sales have been disappointing. There’s heightened concern about global growth.”

Three-Day Rout

The MSCI All-Country World Index trimmed its year-to-date gain to less than 10 percent. More than $5 trillion has been added to equity values worldwide this year on speculation central bankers will keep economies expanding. The gains pushed valuations in the MSCI World index to about 15 times annual earnings from as low as 11.8 times in November 2011, data compiled by Bloomberg show.

The S&P 500 dropped for the third time in four days. After the close, Facebook Inc. (FB) rallied 6 percent in extended trading after reporting earnings and sales that topped estimates in its second report since its May initial public offering.

Gauges of commodity producers and financial companies tumbled at least 1.6 percent to lead losses in all 10 of the main industry groups in the S&P 500. Apple Inc., which rallied 4 percent yesterday and helped the market recover from an early slump, slipped 3.3 percent today after unveiling its new iPad Mini, a smaller version of its best-selling tablet computer.

Market Movers

DuPont tumbled 9.1 percent, the most among the world’s 500 biggest companies and the stock’s biggest drop in almost four years, after also cutting its forecast on declining demand for paint pigment and solar cells. 3M Co., the maker of products from Post-it Notes to dental braces, slid 4.1 percent after cutting its forecast as a recession in Europe and slowing growth in Asia crimped sales. Xerox Corp. sank 5.1 percent as profit fell on weakening demand, while Regions Financial Corp. plunged 7.6 percent on plans to move as much as $400 million in loans to non-performing status.

Yahoo! Inc. (YHOO) rallied 5.7 percent, the most this year, as new Chief Executive Officer Marissa Mayer outlined her turnaround strategy for the biggest U.S. Web portal, emphasizing mobile technology and personalized services. Coach Inc. and Harley- Davidson Inc. climbed more than 7 percent on better-than- estimated earnings.

The Stoxx Europe 600 Index (SXXP) fell 1.7 percent as about 11 shares declined for every one that advanced. Alfa Laval sank 5.7 percent. Master Blenders (DE), the coffee and tea company spun off by Sara Lee Corp. in June, slid 5.3 percent after the company reported revenue that missed analysts’ estimates.

Luxury Goods

European luxury-goods companies retreated as Mulberry Group Plc (MUL), a British handbag maker, tumbled 24 percent after forecasting a decline in profit. Burberry Group Plc lost 3.2 percent and Cie. Financiere Richemont SA slipped 1.9 percent.

Treasuries advanced amid speculation the Federal Reserve will reiterate the need for low borrowing costs at the end of a two-day policy meeting that starts today. The 10-year note yield fell five basis points to 1.76 percent. Similar-maturity German bund yields dropped five basis points to 1.57 percent.

Gasoline fell 1.3 percent to $2.6128 a gallon in the longest losing streak since at least October 2005. Regular gasoline at service stations, averaged nationwide, fell to $3.665 on Oct. 21 after peaking this year at $3.936 in early April, according to data from AAA, the largest U.S. motoring group. Copper slid 1.5 percent and oil dropped $1.98 to $86.67 a barrel, the lowest settlement since July 12.

Emerging Markets

The MSCI Emerging Markets Index fell 1 percent. The Shanghai Composite Index lost 0.9 percent, the most in almost three weeks, as Citigroup Inc. cut its 2012 economic growth estimates for China. Russia’s Micex Index slipped 1.3 percent on lower oil, while India’s Sensex declined 0.4 percent and Brazil’s Bovespa sank 1.7 percent.

The Hong Kong dollar strengthened against 14 of 16 major peers. The Hong Kong Monetary Authority said it sold HK$3.914 billion to prevent currency appreciation. The city’s de facto central bank stepped in on Oct. 19 for the first time since 2009 to prevent the city’s currency from rising against the U.S. dollar after it touched the upper limit of a range that triggers an intervention. Hong Kong’s stock market was closed today for a holiday.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Chris Nagi at chrisnagi@bloomberg.net

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