Stocks, commodities and the euro fell as European finance ministers
met to discuss the region’s debt crisis, while the yen gained and
Chinese shares slid as the World Bank forecast slowing growth in East Asia.
The MSCI All-Country World Index fell 0.7 percent at 12:18 p.m. New York time and the Standard & Poor’s 500 Index lost 0.4 percent. The euro weakened against 13 of 16 major peers and the yen gained versus all 16, while the rand dropped to the lowest since April 2009. China’s yuan touched the highest level since 1993, while the Shanghai Composite Index (SHCOMP) slipped on the first trading day after a week’s holiday. Zinc and Silver led commodities lower.
European finance ministers
are meeting in Luxembourg to discuss Spain’s finances and closer banking
cooperation, while German Chancellor Angela Merkel
visits Greece tomorrow for the first time since the crisis erupted.
Growth in developing East Asia will probably slide to an 11-year low of
7.2 percent this year, the World Bank estimates. Alcoa Inc. (AA)
unofficially starts the U.S. earnings season with the release of its
third-quarter numbers tomorrow, the fifth anniversary of the record
highs in the S&P 500 (SPX) and Dow Jones Industrial Average.
“We’re back to dealing with the issues in Europe,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview today. His firm oversees $20 billion. “We’re going back to a period where investors become less enthusiastic as they realize the problems of the world have not gone away.”
Among U.S. stocks, Apple Inc., the largest company, slid 2 percent to $639.77 and dropped below $600 billion in market value after rising above that threshold in August. The shares are down about 9 percent from their record closing level of $702.10 on Sept. 19.
The S&P 500 pared last week’s 1.4 percent rally. Earnings at companies in the S&P 500 are projected to fall 1.7 percent in the third quarter in the first decline since 2009, according to more than 11,000 analyst forecasts compiled by Bloomberg. Of the 500 companies in the benchmark gauge for U.S. equities, 26 have reported results so far, with profit falling an average 2.1 percent, data compiled by Bloomberg show.
“While recession in the U.S. is not necessarily imminent, earnings are weakening fairly quickly,” Gina Martin Adams, a Wells Fargo & Co. strategist, wrote in a note today. “Formerly strong export and investment sensitive sectors are suffering from economic and policy uncertainty, pressuring index earnings to the brink.”
Economists project U.S. gross domestic product will increase 2.05 percent next year after rising 2.2 percent in 2012, according to the median of estimates compiled by Bloomberg.
The Stoxx 600 fell 1 percent as all 19 industry groups retreated. Cookson Group Plc (CKSN), a British supplier of materials to the steel and glass industry, plunged 12 percent after predicting its annual performance will be “materially” below its target.
Eurobank Ergasias SA surged 5.1 percent in Athens as National Bank of Greece SA offered to acquire its domestic rival as the nation’s debt crisis forces a wave of mergers. National Bank rallied 5.7 percent.
The rand weakened as much as 2.4 percent to 8.9942 per dollar, the lowest level since April 2009, as strikes in South Africa’s mining and transportation industries spread to other sectors of the economy.
The yield on Germany’s 10-year bond fell four basis points to 1.48 percent. The nation’s industrial production in August declined 0.5 percent from July, the Economy Ministry in Berlin said today. Economists had forecast a drop of 0.6 percent, according to a Bloomberg News survey.
China’s yuan climbed to 6.2812 per dollar, the strongest level since the nation unified official and market exchange rates at the end of 1993, before closing 0.04 percent lower at 6.2872, according to the China Foreign Exchange Trade System. Today’s high exceeded the central bank’s reference rate by a record 0.98 percent, near to the maximum 1 percent divergence that is permitted.
The Shanghai Composite Index dropped 0.6 percent as data signaling slowing growth outweighed an increase in tourism sales during the so-called Golden Week holiday that ended Oct. 5.
Silver led commodities lower, falling 1.6 percent, while gold declined 0.4 percent to $1,773.52 an ounce. West Texas Intermediate oil in New York slipped 0.5 percent to $89.43 a barrel and copper dropped 1.5 percent to $3.7220 a pound. Futures for gasoline fell 0.6 percent to $2.9356 a gallon.
Pump prices in California rose to an average $4.668 a gallon, 22 percent higher than the U.S. average, according to data today from AAA, the nation’s largest motoring organization. Governor Jerry Brown directed state regulators to relax smog controls so refineries can increase supplies of cheaper fuel.
The MSCI All-Country World Index fell 0.7 percent at 12:18 p.m. New York time and the Standard & Poor’s 500 Index lost 0.4 percent. The euro weakened against 13 of 16 major peers and the yen gained versus all 16, while the rand dropped to the lowest since April 2009. China’s yuan touched the highest level since 1993, while the Shanghai Composite Index (SHCOMP) slipped on the first trading day after a week’s holiday. Zinc and Silver led commodities lower.
The euro weakened against all its major peers. Photographer: Simon Dawson/Bloomberg
Oct. 8 (Bloomberg) -- Mark
Burgess, chief investment officer at Threadneedle Investments, talks
about the outlook for European equities and bonds.
He speaks with Guy Johnson on Bloomberg Television's "The Pulse."
(Source: Bloomberg)
Oct. 8 (Bloomberg) -- Peter
Thiel, co-founder of Paypal Inc. and founder of Clarium Capital
Management LLC, talks about investor sentiment and the
financial-services industry.
Thiel, who led the first outside investment in Facebook Inc., also
discusses what makes a company great. He speaks with Erik Schatzker on
Bloomberg Television's "Market Makers." (Source: Bloomberg)
Oct. 8 (Bloomberg) -- John
Manley, chief equity strategist at Wells Fargo Advantage Funds, talks
about the outlook for U.S. stocks and investment strategy.
Manley speaks with Tom Keene, Sara Eisen and Scarlet Fu on
Bloomberg Television's "Surveillance." (Source: Bloomberg)
Angela Merkel, Germany's chancellor, left, with Mariano Rajoy, Spain's prime minister. Photographer: Angel Navarrete/Bloomberg
“We’re back to dealing with the issues in Europe,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview today. His firm oversees $20 billion. “We’re going back to a period where investors become less enthusiastic as they realize the problems of the world have not gone away.”
Below $600 Billion
U.S. bond trading was closed for the Columbus Day holiday, while Canadian markets were shut for Thanksgiving.Among U.S. stocks, Apple Inc., the largest company, slid 2 percent to $639.77 and dropped below $600 billion in market value after rising above that threshold in August. The shares are down about 9 percent from their record closing level of $702.10 on Sept. 19.
The S&P 500 pared last week’s 1.4 percent rally. Earnings at companies in the S&P 500 are projected to fall 1.7 percent in the third quarter in the first decline since 2009, according to more than 11,000 analyst forecasts compiled by Bloomberg. Of the 500 companies in the benchmark gauge for U.S. equities, 26 have reported results so far, with profit falling an average 2.1 percent, data compiled by Bloomberg show.
“While recession in the U.S. is not necessarily imminent, earnings are weakening fairly quickly,” Gina Martin Adams, a Wells Fargo & Co. strategist, wrote in a note today. “Formerly strong export and investment sensitive sectors are suffering from economic and policy uncertainty, pressuring index earnings to the brink.”
Bank Earnings
The companies analysts are most bullish about are the ones whose stock prices are farthest below their highs -- banks. While financial institutions in the S&P 500 climbed 24 percent in 2012 for the biggest rally in nine years, they remain 58 percent below the record of February 2007, according to data compiled by Bloomberg. Signs of a housing recovery prompted Wall Street firms to raise estimates for profit growth to 21 percent for the third quarter and 32 percent in the fourth, the most of 10 S&P 500 industries.Economists project U.S. gross domestic product will increase 2.05 percent next year after rising 2.2 percent in 2012, according to the median of estimates compiled by Bloomberg.
Market Leaders
Home Depot Inc., Walt Disney Co. and General Electric Co. paced declines in the Dow Jones Industrial Average. Facebook Inc., operator of the world’s largest social network, dropped 2 percent after being downgraded at BTIG LLC. Netflix Inc., the world’s largest video-subscription service, advanced 10 percent after the shares were raised at Morgan Stanley.The Stoxx 600 fell 1 percent as all 19 industry groups retreated. Cookson Group Plc (CKSN), a British supplier of materials to the steel and glass industry, plunged 12 percent after predicting its annual performance will be “materially” below its target.
Eurobank Ergasias SA surged 5.1 percent in Athens as National Bank of Greece SA offered to acquire its domestic rival as the nation’s debt crisis forces a wave of mergers. National Bank rallied 5.7 percent.
Euro Retreats
The euro depreciated 1.2 percent to 101.35 yen and weakened 0.6 percent to $1.2971. Ministers from all 27 nations in the European Union meet tomorrow while Spanish Prime Minister Mariano Rajoy will travel to Paris on Oct. 10 for talks with French President Francois Hollande.The rand weakened as much as 2.4 percent to 8.9942 per dollar, the lowest level since April 2009, as strikes in South Africa’s mining and transportation industries spread to other sectors of the economy.
The yield on Germany’s 10-year bond fell four basis points to 1.48 percent. The nation’s industrial production in August declined 0.5 percent from July, the Economy Ministry in Berlin said today. Economists had forecast a drop of 0.6 percent, according to a Bloomberg News survey.
China’s yuan climbed to 6.2812 per dollar, the strongest level since the nation unified official and market exchange rates at the end of 1993, before closing 0.04 percent lower at 6.2872, according to the China Foreign Exchange Trade System. Today’s high exceeded the central bank’s reference rate by a record 0.98 percent, near to the maximum 1 percent divergence that is permitted.
The Shanghai Composite Index dropped 0.6 percent as data signaling slowing growth outweighed an increase in tourism sales during the so-called Golden Week holiday that ended Oct. 5.
‘Incredible Counterweight’
“During the previous crisis back in 2009, China acted as an incredible counterweight to the western difficulties with this huge infrastructure boost,” said Stephen King, chief economist at HSBC Holdings Plc. “We’re not seeing this same kind of boost from China this time around. Everyone exposed to southern Europe is not benefiting from a China boom and that’s really hitting world trade.”Silver led commodities lower, falling 1.6 percent, while gold declined 0.4 percent to $1,773.52 an ounce. West Texas Intermediate oil in New York slipped 0.5 percent to $89.43 a barrel and copper dropped 1.5 percent to $3.7220 a pound. Futures for gasoline fell 0.6 percent to $2.9356 a gallon.
Pump prices in California rose to an average $4.668 a gallon, 22 percent higher than the U.S. average, according to data today from AAA, the nation’s largest motoring organization. Governor Jerry Brown directed state regulators to relax smog controls so refineries can increase supplies of cheaper fuel.
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