US stocks sink on sour IMF growth outlook

October 10, 2012 | 09:09
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US stocks skidded Tuesday after the IMF cut its global economic growth forecasts and investors braced for the start of a poor third-quarter earnings season.

The International Monetary Fund's gloomier outlook for 2012 and 2013 global growth came a day after the World Bank slashed its growth estimates for developing countries in East Asia and the Pacific.

The Dow Jones Industrial Average finished down 110.12 points, or 0.81 percent, at 13,473.53.

The S&P 500 slid 14.40 (0.99 percent) to 1,441.48 and the tech-rich Nasdaq shed 47.33 (1.52 percent) at 3,065.02.

"Stocks were under pressure throughout the day as investors responded to the IMF's downward revision to global growth for 2012 and 2013," said Wells Fargo Advisors.

"Low expectations for third-quarter earnings season also weighed on equities."

Investors expect a weak third-quarter earnings season that unofficially kicked off with Dow member Alcoa after the closing bell. Shares in the aluminum giant added 0.1 percent on the blue-chip index.

"So far, there have been a lot more companies that have pre-announced/guided lower-than-expected numbers, versus those with upside surprises," said Bryan Sapp, an equities analyst at Schaeffer's Investment Research.

After the market closed, Alcoa reported a third-quarter loss that was narrower than Wall Street expected. Alcoa shares rose 0.7 percent in after-market trade.

The Dow's biggest laggard was Intel, down 2.7 percent after Barclays downgraded the chip maker.

Apple, the world's biggest company by market cap, also was swept up in a technology sell-off, losing 2.3 percent before closing down 0.4 percent at $635.85.

Google fell 1.8 percent, Microsoft dropped 1.7 percent, Dell was down 2.5 percent and Hewlett-Packard lost 0.6 percent.

Video service giant Netflix plunged 10.9 percent after a downward rating from Bank of America Merrill Lynch.

Wells Fargo dropped almost 2.0 percent after the US government filed a home-loan fraud lawsuit against the nation's biggest mortgage lender.

In merger and acquisition news, tool and hardware maker Stanley Black & Decker dropped 2.7 percent after announcing the sale of its hardware and home improvement business to Spectrum Brands Holdings for $1.4 billion. Spectrum soared 11.8 percent.

On Monday, stocks finished in the red in listless trade amid concern about growth in Asia and Europe. The Dow fell 0.19 percent and the Nasdaq shed 0.76 percent.

US bond prices climbed as investors sought Treasuries as a safe haven, driving yields lower.

The 10-year Treasury yield fell to 1.72 percent from 1.73 percent Friday, while the 30-year yield dropped to 2.94 percent from 2.97 percent. The US bond market was closed Monday for a public holiday.


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