U.S. Stocks Fall Amid Europe Woes as Economic Data Disappoint
U.S. stocks retreated, snapping a two-day gain, on rising concern about a Greek bailout and growing signs that the American economy is slowing.
Wells Fargo & Co. (WFC) and Bank of America Corp. (BAC) slid at least 3 percent, following losses in European lenders, as officials failed to agree on a rescue plan for Greece. Caterpillar Inc. (CAT) and Alcoa Inc. (AA) slumped more than 1.6 percent as lower-than- forecast data on manufacturing, industrial production and homebuilder confidence added to signs the economy is slowing. Ford Motor Co. (F) fell 2.2 percent after saying pretax profit will be lower in the second half than in the first half.
The Standard & Poor’s 500 Index dropped 1.6 percent to 1,267.86 at 12:38 p.m. in New York. The gauge yesterday advanced the most in almost two months. The Dow Jones Industrial Average declined 163.74 points, or 1.4 percent, to 11,912.37 today.
“They keep talking about kicking the can down the road in Europe,” said Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees $859 billion. “The can is getting heavier and heavier when they kick down. The economy is in a slow patch. We suspect that weaker economic data should help curtail the march higher in commodities. The dollar-euro trade is on. We’re seeing a risk- off day for the markets.”
Benchmark gauges rose over the last two days, rebounding from six weeks of losses, as a pickup in takeovers and better- than-estimated data on American retail sales and Chinese industrial production bolstered confidence. The S&P 500 was still down 5.6 percent from this year’s high at the end of April through yesterday amid concern about an economic slowdown.
Global Stocks Slump
Stocks from Hong Kong to Sao Paulo fell today as European officials failed to agree on a rescue plan for Greece. An emergency session of finance ministers ended with no progress on a new aid package for Greece, German Finance Minister Wolfgang Schaeuble said yesterday. BNP Paribas SA, Societe Generale SA and Credit Agricole SA may have their debt ratings cut because of their investments in Greece, Moody’s Investors Service said today.
Stocks also fell as a report showed that manufacturing in the New York region unexpectedly shrank in June, a sign the industry still faces parts shortages following the disaster in Japan. Another report showed that confidence among U.S. homebuilders slumped in June to the lowest level in nine months as executives turned more pessimistic on the outlook for sales, a sign that any pickup will take time to develop.
Separately, figures from the Federal Reserve showed that industrial production in the U.S. rose less than forecast in May, restrained by a slump in utility output and shortages of auto parts from Japan. The cost of living in the U.S. rose more than forecast in May, reflecting higher prices for everything from autos to hotel rooms, another report showed.
“The market will sell first and ask questions later,” said Mark Luschini, chief investment strategist at Philadelphia- based Janney Montgomery Scott LLC, which manages $54 billion. “The latest figures are cementing this mushy patch of economic data. In addition, there’s concern about Greece. Ultimately, there will be some resolution, but we’ve had a couple of false starts. There’s still a lot of work and compromise.”
The KBW Bank Index fell 2 percent as all of its 24 stocks retreated. Wells Fargo dropped 2.6 percent to $26.33. Bank of America slid 3.1 percent, the most in the Dow, to $10.47.
Caterpillar slumped 1.6 percent to $96.27. Alcoa slid 2.8 percent to $14.98.
Ford dropped 2.2 percent to $13.13 after saying that pretax profit will be lower in the second half than in the first half as the company faces rising structural and commodities costs.
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