Wall Street drops on poor US data
THE S&P 500 extended its slide to a fourth day yesterday, hitting its lowest level since March 18, as a spate of recent weak US data lent support to a bearish outlook for the economy.
Sectors most closely associated with economic fortunes took the biggest beating, with shares of Bank of America off 4 per cent to $10.83, the stock’s lowest close since May 2009.
As stocks have continued to fall, buying support has dried up, sending the S&P 500 through a series of technical support levels.
“The concern there deals with the weakening job market, capital requirements, quality of assets – particularly with the double-dip in housing and flattening yield curve. All those things are working against financials and set a weaker tone for the market as a whole,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
Energy shares were also among the hardest-hit sectors, with the PHLX oil service sector index off 3.2 per cent. Chevron dropped 1.3 per cent to $9.68 as the biggest drag on the Dow.
Oil fell in choppy trading on increased expectations OPEC will boost production targets this week as concerns about high prices curbing oil demand lingered.
“There has been concern that the driving season has peaked already as a result of the slowing economy, and that puts pressure on the refined products and concurrently on the crude products,” said Hellwig.
US stocks have been battered over the past five weeks on a number of disappointing reports, culminating in Friday’s US employment report, which showed employers added a meager 54,000 jobs last month and the unemployment rate rose to 9.1 per cent.
With the second-quarter earnings season more than a month away, the market focused on the uncertain economic outlook.
The Dow Jones industrial average dropped 61.15 points, or 0.50 per cent, to 12,090.11. The Standard & Poor’s 500 Index fell 13.99 points, or 1.08 per cent, to 1,286.17. The Nasdaq Composite Index lost 30.22 points, or 1.11 per cent, to 2,702.56.
In a sign a slowing economy could hurt earnings, JP Morgan cut its rating on home improvement chain Lowes Cos, citing softening home prices and stagnant job growth. The shares fell 2.3 per cent to $22.87.
Apple dipped 1.6 per cent to $338.04 after Chief Executive Steve Jobs appeared at a product launch.