CLOSING BELL: July 9: DJIA: 12,739.29 | DOWN 36.18 | -0.28%
OIL: $85.99, UP 1.54, +1.82%
GOLD: $1,589.10, UP 10.20, +0.65%
GASOLINE (US Avg): $3.382, +.001
Global Worries Hit Wall Street Ahead of Earnings
Caroline Valetkevitch, Reuters – Stocks slipped in light trading on Monday, weighed down by weak economic data from Asia and signs of economic trouble in Europe, underscored by higher Spanish and Italian bond yields.
Monday’s decline, the third in a row for the S&P 500 index, comes as quarterly earnings reports get under way. Investors are anxious to see what impact weak demand in Europe and slowing growth in Asia have had on corporate America.
“We think 2Q earnings for the S&P 500 will be OK this quarter … we’re calling for a small 2 percent beat. That said, we expect the tone of earnings season to be quite negative,” said Jonathan Golub, chief strategist at UBS in New York.
Stocks pared losses late in the session, leaving indexes with just slight losses.
Alcoa Inc’s (AA.N) stock fluctuated throughout the day, ending up 0.3 percent at $8.76 in the regular session. Alcoa’s shares rose 2 percent in extended trading after the largest U.S. aluminum company and Dow component released its results, marking the start of the earnings season.
Corporate outlooks are at their most negative in nearly four years, and companies that have already reported have shown lackluster growth. Nearly two dozen S&P firms have already cited Europe’s woes – which seem to be worsening – as a concern.
While a majority of corporations may beat lowered analyst expectations, investors will be focused on how well companies are handling weakness overseas.
Based on “where we are today, we may see muted to a slightly downward reaction to earnings,” said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, whose firm manages about $13 billion in assets.
The Dow Jones industrial average .DJI ended down 36.18 points, or 0.28 percent, at 12,736.29. The Standard & Poor’s 500 Index .SPX was down 2.22 points, or 0.16 percent, at 1,352.46. The Nasdaq Composite Index .IXIC was down 5.56 points, or 0.19 percent, at 2,931.77.
Volume was among the lightest of the year. About 5.1 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, compared with the year-to-date daily average of 6.85 billion shares.
Italian borrowing costs continued to rise on Monday while Spanish 10-year yields rose above 7 percent. That level is seen as unsustainable in the longer-term and reflecting doubts over how measures agreed last month to stem the euro zone debt crisis will be implemented.
Read the rest of the story at Reuters here.
The Common Good publishes a financial market wrap-up every weekday after markets close.