Stocks slide as debt fears outweigh Apple's results

Dow Jones: 12,571.91 (–15.51) Nasdaq: 2,814.23 (–12.29) S&P 500: 1,325.84 (–0.89)US STOCKS fell yesterday, a day after the best rally since March for the Standard and Poor's 500, as concern the government will fail to increase the debt limit overshadowed higher than estimated earnings at Apple.

United Technologies lost 1.8 per cent as Boeing picked a rival engine maker to upgrade its 737 jet.

Yahoo, Altria and Johnson Controls retreated at least 2.4 per cent as results disappointed investors.

Apple jumped 2.7 per cent after record sales of iPads and iPhones lifted profit, helping the company join 89 per cent of SP 500 members topping estimates so far in the earnings season.

The SP 500 slipped 0.1 per cent in New York after surging 1.6 per cent on Tuesday as President Barack Obama endorsed a bipartisan deficit-reduction plan from the so-called Gang of Six senators.

“There have been a couple of companies that have had some nice beats,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Invest-ment Management said.

“But the macro environment is weighing on things and people are still worried about the US debt situation,” he said.

The proposal for a $3.7 trillion debt-cutting plan praised by President Obama is facing resistance from House Republicans, as lawmakers intensify efforts for a compromise on government spending less than two weeks before a threatened default. Mr Obama plans to renew talks at the White House this week with congressional leaders as the Democratic-led Senate and Republican House pursue divergent paths toward ending the stalemate.

“Investors in the stock market do believe US lawmakers will reach a deal on raising the nation’s debt limit as the likelihood that tax increases will be part of the plan, said Byron Wien, vice chairman of Blackstone Advisory Partners.

“There’s a residual feeling on the part of investors that somehow this will be solved.

“The point that the market was so excited about yesterday was that since it was a bipartisan group of six there was a possibility there could be revenue increases in addition to spending cuts – that’s key to getting an agreement,” he said. – (Bloomberg)