Stocks slump on Coca-Cola forecast
Stocks sagged Wednesday after Coca-Cola Co. and several other companies issued gloomy forecasts, and a lower-than-expected reading on industrial production for August threw the nation’s broader economic outlook into question.
Adding pressure to technology shares, the Goldman Sachs Group lowered its ratings on both hardware and software stocks based on its latest survey of corporate officers who oversee high-tech spending. With corporate forecasts falling short of expectations and a number of signals pointing to more modest capital spending, worries about a slower second half were intensifying, but analysts say it’s too soon to tell what lies ahead.
“We’ve been saying for a while that investors need to be much more selective … this is a stock-picking kind of market,” said John Caldwell, chief investment strategist for McDonald Financial Group. “It may be that Coke’s problems are just Coke’s problems. On the flip side of that, there are a number of companies out there that are saying relatively good things.”
The Dow Jones industrial average slid 86.80, or 0.8 percent, to 10,231.36.
The other gauges were also lower. The Nasdaq composite index slumped 18.88, or 1 percent, to 1,896.52. The Standard & Poor’s 500 index lost 7.96, or 0.7 percent, to 1,120.37.
The Federal Reserve reported only a 0.1 percent rise in industrial production in August, surprising economists who had forecast a 0.5 percent gain. The feeble rise, which follows a robust 0.6 percent advance in July, suggests the economy may still be working through the “soft patch” Federal Reserve Alan Greenspan referred to in remarks before Congress last week.
Dow component Coca-Cola fell 4 percent, or $1.71, to $41.16, after warning that results for the second half of the year were likely to fall short of expectations due to weaker sales and challenging conditions in key markets.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange. Volume came to 1.25 billion shares, up slightly from 1.2 billion shares in the previous session.
The Russell 2000 index, which tracks smaller company stocks, was down 2.44, or 0.4 percent, at 568.52.
Overseas, Japan’s Nikkei stock average finished 1.2 percent lower Wednesday. In Europe, France’s CAC-40 shed 0.4 percent for the session, Britain’s FTSE 100 closed up 0.1 percent and Germany’s DAX index lost 0.15 percent.
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