Wall Street retreats on fiscal growth concerns

Dow Jones: 12,143.24 (–96.87) Nasdaq: 2,756.38 (–9.87) S&P 500: 1,292.28 (–8.39)US STOCKS slid yesterday, as economic growth trailed forecasts and investors awaited the outcome of negotiations to avoid a federal default.

Energy and materials stocks led declines in the SP 500 after the report on gross domestic product sent the gauge tumbling as much as 1.4 per cent.

The Dow Jones industrial average was down 96.87 points, or 0.79 per cent, at 12,143.24.

The Standard & Poor’s 500 Index fell 8.39 points, or 0.65 per cent, at 1,292.28.

The Nasdaq Composite shed 9.87 points, or 0.36 per cent, at 2,756.38.

“The economy appears to be almost at stall speed, which means the politicians are playing with fire because any type of event could push us into a recession,” Tim Hoyle, director of research at Radnor, Pennsylvania-based Haverford Trust, said.

“Today’s GDP number is a bigger concern to us as long-term investors than when a Bill is going to get passed in Congress, but this mess is hurting business and consumer confidence,” he said.

The S&P 500 has tumbled 3.9 per cent this week as concern mounted that lawmakers will fail to agree to increase the US debt ceiling by the Treasury Department’s deadline.

Merck dropped 2.3 per cent to $34.13 for the second-biggest decline in the Dow. The second-largest US drug maker said it plans to slash its workforce by an additional 12 to 13 per cent by 2015, expanding a restructuring program to save as much as $4.6 billion a year.

Newmont Mining fell 3.5 per cent to $55.71. The largest US gold producer reported second-quarter profit that trailed analysts’ estimates as mining costs increased.

Exxon Mobil, the largest US oil company, slipped 2.1 per cent to $79.79 as the price of oil fell.

Yahoo! sank 3.1 per cent to $13.08, after rising as much as 4.2 per cent.

Starbucks rose 0.2 per cent to $40.07. The world’s largest coffee-shop operator reported third-quarter earnings that exceeded analysts’ estimates as customer traffic increased in the US.

Expedia climbed 9.1 per cent to $31.64. The online travel site reported second-quarter earnings, beating the average analyst estimate by 12 per cent. – (Bloomberg/Reuters)