Concerns over economy weigh on Wall Street

Dow Jones: 11,504.62 (–72.43) Nasdaq: 2,604.04 (–53.39) S&P 500: 1,209.88 (–15.50)US STOCKS slumped yesterday, following Tuesday's rally for benchmark gauges, amid concern about the strength of the economy and an impasse over European bailout talks, while Apple tumbled on disappointing results.

Apple, the world’s largest technology company, slumped 5.2 per cent to $400.39 after profit missed estimates for the first time in at least six years.

The company sold 17.07 million iPhones, less than the 20 million projected by analysts surveyed by Bloomberg.

“Time is running out for Europe,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, said.

“The longer it waits to fix itself, the more uncertainty there is. In the US, earnings are not bad, but we’re seeing a bit of erosion in positive surprises. We set the top of the range on the S&P 500. It would take a lot of good news to get through 1,230,” he said.

The S&P 500 rose from the threshold of a bear market early this month amid optimism over earnings and steps by European leaders to support banks.

European leaders assembled in Frankfurt in an effort to narrow divisions before an October 23rd summit meant to tame the region’s sovereign debt crisis.

France and Germany split on the role of the European Central Bank in leveraging the rescue fund as banks lobbied against forced recapitalisations and larger writedowns of Greek debt.

The Federal Reserve said consumer spending rose slightly last month and the economy maintained its expansion, even as companies reported more doubt about the strength of the recovery.

“Overall economic activity continued to expand in September, although many districts described the pace of growth as ‘modest’ or ‘slight,’’’ the Fed said in its Beige Book survey released yesterday in Washington.

Alcoa slid 3.1 per cent to $9.83, while DuPont fell 2.7 per cent to $43.78.

Bank of America dropped 3 per cent to $6.44.

Wells Fargo declined 2.2 per cent to $25.28.

Travelers rallied 5.7 per cent, the most in the Dow, to $54.39, after the insurer reported an increase in third-quarter policy sales and said it was raising rates for clients. – (Bloomberg)