Sun, Oct 14, 2012 - Page 15 News List

Grim outlook sees US stocks fall most in past four months

AFP, NEW YORK

Powered by extra-cheap money and rising company profits for months, US investors turned cool this week as the third-quarter earnings season opened amid glum analyst predictions.

The markets closed their worst week in four months on Friday, the major indices each losing more than 2 percent. Big blue chips fell along with smaller companies, underscoring the worries that the earnings recovery of the past 18 months has petered out.

Tech favorites Apple Inc (minus-3.5 percent) and Google Inc (minus-3 percent) fell well below their yearly highs reached only weeks ago, and newcomer Facebook Inc followed suit (minus-6.7 percent).

The blue chips of the Dow also fell under the gloom, with Alcoa, which kicked off quarterly earnings reporting on Tuesday, losing 4.4 percent for the week on its lowered forecast.

For the week, the broad-based S&P 500 lost 2.21 percent to 1,428.59. The narrower blue chip list, the Dow Jones Industrial Average, was down 2.07 percent to 13,328.85, and the NASDAQ Composite, led by tech stocks, fell 2.94 percent.

“Major equity indices slid for most of the week as market sentiment faced headwinds from several corners,” IHS Global Insight’s Paul Edelstein said. “Investors held their fire in anticipation of a weak third quarter corporate earnings season.”

Equity Station vice president Jody Giraldo blamed “expectations that numbers are going to come lower than expected, specifically as the worldwide economy slows down.”

Economic data, mixed during the week, was also not taken favorably by investors, Harris Private Bank’s chief investment officer Jack Ablin said.

“It appears that a lot of the fundamentals that investors watch were really weak. The economic data and earnings reports really prompted a little investor concern,” Ablin said.

That all explained why the markets greeted JPMorgan Chase’s and Wells Fargo’s positive results on Friday with selling, pushing other financials down as well.

Economic data and eurozone action next week will combine with results from scores of companies to test investors’ moods.

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