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Overnight Markets: Wall Street declines as IMF cuts growth forecast
Brokerage downgrades of Intel triggered losses in tech shares, while Alcoa gained after the bell after reporting better-than-estimated quarterly results.
Wall Street declined on Tuesday after the International Monetary Fund cut estimates for global growth and as brokerage downgrades of Intel triggered losses in technology companies.
The Dow Jones industrial average fell 110 points, or 0.81%, to 13,474 at the close. The S&P 500 lost 14 points, or 0.99%, to 1,441. The Nasdaq Composite dropped 47 points, or 1.52%, to close at 3,065.
The IMF said yesterday that the world economy will expand 3.3% this year, the slowest since 2009, and 3.6% next year, compared with July predictions of 3.5% in 2012 and 3.9% in 2013.
In Europe, finance ministers from all the 27 countries in the European Union convened in Luxembourg yesterday in the lead up to a summit of the region’s leaders in Brussels on 18-19 October.
Consumer discretionary and technology companies suffered the most. Intel plunged 2.7% after negative reports by at least two brokerages. Robert W. Baird & Co cut its price target on the stock, citing weak demand for notebooks.
Microsoft shares lost 1.7% and ranked as the biggest drag on both the Nasdaq and the S&P 500. Apple Inc. lost 0.4%.
Dow component Alcoa Inc reported quarterly results after the bell and its stock closed up 0.1% at $9.13.
Shares of Netflix slid 10.9%, reversing Monday's sharp gains after Bank of America Merrill Lynch cut the video streaming company's stock to "underperform" from "buy."
Chinese Internet company Baidu was also downgraded by Credit Suisse to "underperform" from "neutral." Its shares shed 6.8%.
Owens Corning Inc., which produces materials for residential and commercial buildings, slumped 8.3% after the company cut its earnings estimates for this year.
In Asia, shares declined on Wednesday as investors were concerned over China’s economic slowdown and its territorial dispute with Japan.
The MSCI Asia Pacific Index dropped 0.8% to 121 as of 12:21 p.m. in Tokyo. Japan’s Nikkei 225 Stock Average declined 1.7%, while South Korea’s Kospi Index slipped 1.2%. Singapore’s Straits Times Index dropped 0.9% and Australia’s S&P/ASX 200 Index fell 0.3%. Hong Kong’s Hang Seng Index slid 0.5%, while China’s Shanghai Composite Index was little changed.
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by Gavin Lumsden on May 22, 2013 at 16:58