Economic worries drive stocks down
U.S. stocks took their biggest loss in almost a month Tuesday as investors worried about the health of the U.S. economy and sold shares in retailers and car companies. The price of oil continued to decline.
Travel companies fell after cruise line operator Royal Caribbean cut its projections for the year, and automakers and suppliers fell after car companies reported lower U.S. sales for the month of July. Banks finished lower as investors worried about the health of banks in Europe.
Although stocks set alltime records as recently as July 22, investors are sensitive to signs of trouble for the U.S. economy, like weaker sales of autos or last week’s disappointing GDP report.
“The market had just rallied and now it’s sort of paused,” said Jim Paulsen, the chief investment strategist for Wells Capital Management. “Any weak reports get magnified.”
The Dow Jones industrial average fell 90.74 points, or 0.5%, to 18,313.77. The Standard & Poor’s 500 index lost 13.81 points, or 0.6%, to 2,157.03. The Nasdaq composite slid 46.46 points, or 0.9%, to 5,137.73. The Dow has fallen seven days in a row, with Tuesday the worst day for U.S. stocks since July 5.
Auto companies reported lower U.S. sales in July as a heatwave kept buyers at home. General Motors said its sales fell 2% and Ford said sales fell 3%. After six straight years of growth, auto sales have reached record levels and are starting to plateau. GM stock shed $1.37, or 4.4%, to $29.93 and Ford lost 54 cents, or 4.3%, to $11.94.
Cruise line operator Royal Caribbean cut its forecasts for the year as the strong dollar continues to hurt its results. That left Royal Caribbean’s stock down $4.51, or 6.3%, to $67.35. Other consumer companies like retailer Kohl’s and office supply chain Staples stumbled.
Citigroup retreated 43 cents, or 1%, to $42.99 and Morgan Stanley fell 50 cents, or 1.8%, to $28. Bank stocks in Europe tumbled for the second day in a row. The losses extended to banks that were effectively given a clean bill of health by the European Banking Authority in last Friday’s stress tests.
Tech stocks also lost ground, including Apple, which fell $1.57, or 1.5%, to $104.48.
Oil prices extended a slide that has lasted more than two weeks. Benchmark U.S. crude fell 55 cents, or 1.4%, to $39.51 in New York. U.S. crude hadn’t closed under $40 a barrel since April 8. Brent crude, which is used to price international oils, sank 34 cents to $41.80 a barrel in London.
In other energy trading, natural gas fell 4 cents to $2.73 per 1,000 cubic feet.
The price of gold rose $13, or 1%, to $1,372.60 an ounce, and silver jumped 20 cents, or 1%, to $20.70 an ounce.
Germany’s DAX and France’s CAC 40 both lost 1.8%. Britain’s FTSE 100 fell 0.7%. Japan’s Nikkei 225 lost 1.5%. Although the Japanese government approved a new economic stimulus package worth about $275 billion, investors were skeptical that the measure would work. China’s Shanghai composite index edged up 0.6%.
Bond prices fell. The yield on the 10-year Treasury note edged up to 1.55% from 1.52%.
The dollar fell to 100.88 yen from 102.35 yen and the euro rose to $1.1227 from $1.1169.