Swiss Stocks Fall as U.S. Economy Grew Slower Than Expected; Holcim Drops
Stocks in Switzerland fell for a second day after a report showed the U.S. economy grew less than forecast in the second quarter.
Nestle SA, the world’s biggest food company, fell 0.3 percent and Holcim Ltd. retreated 1.8 percent, leading Swiss stocks lower, after the U.S. Commerce Department reported that the world’s largest economy grew at an annual rate of 2.4 percent in the second quarter. Cosmo Pharmaceuticals gained 6.3 percent.
The benchmark Swiss Market Index slipped 0.3 percent to 6,200.78 at the 5:30 p.m. close in Zurich, ending the week little changed. The index has gained 1.2 percent this month. The SMI has retreated 11 percent from this year’s high on April 15 amid speculation that Europe’s debt crisis may derail the economic recovery and concern that the Chinese authorities are cooling the nation’s rate of growth. The broader Swiss Performance Index also fell 0.3 percent today.
The 2.4 percent increase to the size of the U.S. economy in the second quarter trailed a median forecast of 2.6 percent of economists surveyed by Bloomberg News. The Commerce Department upwardly revised economic growth in the first quarter to 3.7 percent, showing a jump in inventories. Business investment climbed at the fastest rate since 1997. Corporate spending on equipment and software jumped at a 22 percent annual rate.
Federal Reserve Chairman Ben S. Bernanke last week said the central bank is prepared to take further policy actions if the world’s largest economy “doesn’t continue to improve.”
Nestle, which makes up 24 percent of the SMI, declined for the fifth day, sliding 0.3 percent to 51.50 Swiss francs.
“Investors are concerned about higher input costs in the second half and whether or not companies will be able to pass these on to consumers,” Alex Molloy, an analyst at Credit Suisse Group in London, said today. “There is also limited growth in western Europe and North America for the industry. Kellogg Co. and Colgate-Palmolive Co. disappointing yesterday don’t help either.”
Deutsche Bank AG’s London-based strategist Gareth Evans also downgraded the food and beverage industry to “neutral” on July 27.
Cosmo Pharmaceuticals, the Italian developer of treatments for digestive-tract infections, jumped 6.3 percent to 17 francs. It said first-half sales rose to 14.3 million euros ($18.7 million) while operating profit advanced to 2.1 million euros.
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