Dow Jones: 11,866.62 (–265.87) Nasdaq: 2,669.24 (–95.37) SP 500: 1,254.05 (–32.89):US STOCKS tumbled yesterday, erasing the 2011 gain for the Standard and Poor's 500, after an unexpected drop in consumer spending increased concern that growth in the world's largest economy is faltering.
Stocks extended losses even after the Senate passed legislation to raise the debt limit.
“We’re in a sluggish economy,” Mark Bronzo, a portfolio manager at Security Global Investors in Irvington, New York, said.
“Now that we’ve moved past the debt ceiling fears, people are really focused on growth. The market is very unforgiving. We’re in this period where people don’t love the stock market. They think economic growth is slow. So, there’s a flight to safety,” he said.
The SP 500 fell 5.6 per cent from this year’s high in April through yesterday amid concern about Europe’s debt crisis and speculation that US lawmakers would fail to reach a compromise to boost the nation’s ability to borrow by a deadline set for yesterday.
Stocks fell after the commerce department figures showed purchases slid 0.2 per cent. It was the first drop in consumer spending in almost two years.
Auto companies are feeling the pinch as consumers rein in spending. Ford slumped 4.1 per cent to $11.85 as its light-vehicle sales rose 5.9 per cent to 180,315 vehicles from 170,208 a year earlier, the Dearborn, Michigan-based automaker said.
General Motors predicted industry wide deliveries for July may be little changed from a year earlier as consumers reduce spending. Its shares dropped 3.6 per cent to $27.05.
Coach, the largest US luxury handbag maker, declined 6.5 per cent to $61.03.
United Technologies, the maker of Pratt and Whitney jet engines, retreated 4.1 per cent to $78.93.
Caterpillar, the world’s largest construction and mining-equipment maker, slid 3.5 per cent to $97.18.
Archer Daniels Midland fell 6.1 per cent to $28.63. The world’s largest grain processor reported fiscal fourth-quarter profit that missed analysts’ estimates.
MetroPCS tumbled 37 per cent to $10.25, after a 35 per cent decline led to a pause in trading on the New York Stock Exchange. – (Bloomberg)
