Global economy worries fuel market downturn
NEW YORK – Stocks fell sharply Wednesday for the second time this week as investors continued to worry about how much the global economy is slowing.
Commodities such as oil and copper fared even worse than stocks. Government bonds were a big winner as money flowed in from investors seeking safety. That drove prices higher, and the yield on the 10-year Treasury note fell to its low for the year at one point.
Technology, energy and bank stocks led the market lower. Apple dropped as traders worried about iPhone sales, Bank of America slid after its earnings failed to meet up to Wall Street’s forecasts and energy stocks fell as crude oil continued a weeklong drop.
The Standard & Poor’s 500 index dropped 22 points, or 1.4 percent, to 1,553. Just one week ago the index hit an all-time high of 1,593. It’s down 2.5 percent since then.
Small-company and technology stocks did worse than the overall market.
The Nasdaq composite fell the most of the major indexes, 1.8 percent. It lost 59.96 points to 3,204.67. Apple, which makes up 8 percent of the index, slumped 5.5 percent to $402.80, after a supplier hinted at a slowdown in iPhone and iPad production.
The Russell 2000 of small-company stocks also fell 1.8 percent, to 906.
The Dow Jones Industrial average of 30 large stocks fell 138 points, or 0.9 percent, to 14,618.59 Wednesday, wiping out most of the gain it made Tuesday. The Dow, which hit its own record of 14,865 last Thursday, is down 1.7 percent this week after slumping 265 points on Monday.
The price of crude oil dropped for the fourth day in five, falling $2.04, or 2.3 percent, to $86.68 per barrel, based on expectations that global demand will fall. Copper fell 11.8 cents to an 18-month low of $3.19 a pound.
As stock prices sank, the yield on the 10-year Treasury note fell to 1.70 percent from 1.73 percent. It went as low as 1.68 percent, matching its lowest level of the year.
Despite the big drops this week, the Dow is still 11.6 percent higher this year, the S&P 500 8.8 percent. And while falling energy prices may hurt energy stocks now, in the long run they are good for most companies and will put more money into the pockets of consumers and drive spending.
Reports this week have added to a picture of slowing global growth.
New car sales in Europe fell 10 percent in the first quarter, the European automakers association said Wednesday, as high unemployment saps demand for big purchases. Britain said Wednesday that unemployment rose to 7.9 percent during the three months ending in February, an increase of 0.2 percent from the previous three months.
Analysts expect first-quarter earnings to rise by 1.6 percent, compared with growth of 7.7 percent in the fourth quarter, according to data from S&P Capital IQ. So far, 56 companies have reported earnings this year and 35 have beaten expectations.
© Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.