Stocks Make It 3 ‘Down’ Sessions
By MATT JARZEMSKY
Stocks fell for a third straight day following weak economic signals from the euro zone and fresh concerns from China about slowing global growth.
Major benchmarks extended their retreat from recent multiyear highs. The Dow Jones Industrial Average declined 78.48 points, or 0.6%, to finish at 13046.14.
Standard & Poor’s 500-stock index shed 10.11 points, or 0.7%, to 1392.78. FedEx FDX -3.46% fell after delivering a disappointing earnings outlook and cutting its economic growth forecast. The Nasdaq Composite slid 12 points, or 0.4%, to 3063.32.
Sectors especially exposed to global growth, such as energy and materials, were the session’s biggest decliners. Cabot Oil & Gas COG -6.08% dropped and U.S. Steel X -5.82% slid. Alcoa AA -2.53% and Caterpillar CAT -2.36% led blue chips lower.
“The European debt-contagion woes, which really plagued the market in the latter half of last year, really started to flare up today,” said Adam Sarhan, chief executive of Sarhan Capital. “Couple that with weakness in China, which has been the major driver of the rally so far this year, and it’s not surprising to see a pullback.”
The euro zone’s preliminary composite purchasing managers’ index fell to a three-month low of 48.7 in March, from 49.3 in February, compared with expectations of a slight increase. Readings below 50 indicate contraction, and Thursday’s data indicated output fell during the first quarter. Given the euro-zone economy declined 0.3% in the fourth quarter, a second consecutive quarter of economic contraction would indicate a recession.
European markets declined, with the Stoxx Europe 600 down 1.2% on signs of further contraction in the euro zone and Chinese economies.
“I would put Europe as the No. 1 issue. It has been the No. 1 issue for markets over a year now,” said Adrian Cronje, chief investment officer at Balentine. “The data today suggested the fact that the economic downturn there might be a little worse than people were anticipating a few weeks ago.”
Meanwhile, a preliminary reading of HSBC’s purchasing managers’ index for China fell to a four-month low. The reaction in Asia was muted; China’s Shanghai Composite eased 0.1%, while Japan’s Nikkei Stock Average gained 0.4%.
Underlining growth concerns, FedEx said U.S. and global economies have slowed and that it now expects global gross domestic product to rise 2.3% this year, down from a prior forecast of 2.9%. It also trimmed its domestic economic view and gave a current-quarter projection for its earnings per share that fell short of most analysts’ estimates.
The Conference Board’s index of leading economic indicators posted the fifth increase in a row, suggesting growth at least into the summer.
But a reading from the Federal Housing Finance Agency showed U.S. home prices remain under pressure. The agency said house prices were unchanged in January from a month earlier, falling short of the 0.3% gain economists expected.
Crude-oil futures dropped 1.8% to finish at $105.35 a barrel, while gold futures declined 0.5% to settle at $1,642.30 an ounce, the lowest level since mid-January. The dollar lost ground versus the yen but strengthened against the euro.
ConAgra Foods CAG -0.57% dipped after the company reported sales were flat, excluding an acquisition, in its consumer-foods divisions. The maker of Healthy Choice meals and Hunt’s ketchup reined in expectations for the current period, projecting modest year-over-year earnings growth.
GameStop GME -6.12% tumbled as it forecast current-quarter results well below analysts’ expectations. The company’s fiscal fourth-quarter earnings fell as it grappled with particularly weak sales of Nintendo’s Wii console and games, which were once a booming business.
FuelCell Energy FCEL -11.93% slid after the fuel-cell power-plant maker unveiled plans to sell shares and later said the offering priced at a 15% discount to its latest close.
Dollar General DG +3.11% rose after the discount retailer reported fiscal fourth-quarter earnings and revenue that exceeded expectations and provided an upbeat outlook for 2012.
A trio of newly public companies also saw shares rise. Marketing software maker ExacTarget ET +32.16% surged after its shares began trading on the New York Stock exchange, while payment processor Vantiv’s VNTV +14.71% shares jumped 15% after its debut on the Big Board. Caesarstone Sdot-Yam, CSTE +1.00% an Israel-based maker of quartz slabs for countertops, edged higher on Nasdaq. The three were poised to extend a winning streak for initial public offerings this month. Five debuts in March have made first-day trading gains.
Write to Matt Jarzemsky at email@example.com