Stocks spiral down for a fifth day
A trader works on the floor of the New York Stock Exchange in New York City. (File) / Spencer Platt/Getty Images
(AP) NEW YORK - U.S. stocks slid Tuesday on disappointing news about the U.S. economy, extending a losing streak that could turn into the year's longest.
All three major indexes were down at midday, marred by disappointing news about the U.S. economy and reminders that problems in Europe and Iran are far from solved.
The Dow Jones industrial average fell 94 points, its fifth-biggest loss of the year so far, to 12,835. The broader Standard & Poor's 500 fell 12 points to 1,370. That marked the fifth losing day for both, a record not matched since last summer.
Even the Nasdaq composite index, which eked out a gain in one of the past four days thanks to outsized contributions from Apple, fell. It fell 24 points to 3,023.
Last year, the Dow's longest losing streak was an eight-day plunge in late July and early August, as Congress bickered over the government debt limit and the S&P ratings agency prepared to downgrade the U.S. debt rating. The Dow lost more than 850 points.
The dollar and U.S. Treasury prices rose as investors shifted money into lower-risk investments. Stocks fell broadly in Europe.
Tuesday brought stark reminders that the economy is far from healed. The National Federation of Independent Businesses said its index of small-business optimism fell in March after six months of gains, largely on worries about rising gas prices. U.S. wholesale businesses reported that they restocked their shelves at a slower pace at the beginning of the year.
Spain is being forced to pay bigger returns to attract investors to its bonds, a sign that people are becoming more wary about the Spanish government. In Greece, ferry workers went on strike to protest cuts in government spending, underlying the treacherous path Greece will have to navigate if it is to get its spending under control.
But JJ Kinahan, chief derivatives strategist for TD Ameritrade in Chicago, noted that stocks are still up for the year, the result of a rally that started around Thanksgiving. He brushed off the past week's losses as short-term blips on the radar.
"There seems to be this black cloud as everyone talks about the market," Kinahan said. "(But) a lot of these companies are in a good spot."
Investors are waiting for first-quarter earnings season to get under way after the market closes, when aluminum producer Alcoa reports its results. It could be a mediocre quarter for earnings: Analysts polled by FactSet are expecting a slight decline in earnings growth after nine quarters of gains. They expect a quarterly loss at Alcoa, as slowing growth in China and a tottering Europe crimp demand.
However, the low expectations could be a blessing in disguise. Companies should have an easier time beating them, which can drive up their stock price at least temporarily.
"You might not say it's to their credit, you might not say it's the right thing to do, but the CEOs have done a very good job of setting expectations low," Kinahan said. "Because so many analysts expect flat earnings, these companies that show just a 2 to 3 percent annualized level of growth may have hit a home run."
The last few days of market losses have been caused by a combination of factors, including a disappointing jobs report Friday. The markets started hemorrhaging a week ago, when the Federal Reserved indicated it wouldn't continue buying government bonds to prop up the economy.
Federal Reserve Chairman Ben Bernanke spoke again Monday night but didn't give investors much to discern. He steered clear of talking about the economy and instead focused on regulatory policy.
Analysts have also worried that high gas prices could derail any economic recovery, and Tuesday brought mixed news on that front. Oil prices fell below $102 per barrel in morning trading, a slight relief considering that prices were as high as $110 in recent weeks. But the reason the price went down is discouraging: Traders are betting that a weak U.S. economy will keep demand for oil low.
The buildup in oil prices, which were around $75 in October, is partly due to tension over Iran's nuclear program and the oil embargos that have ensued. Iran, which has already cut off oil shipments to France and Britain, declared Tuesday it would extend the embargo to Greece, a pre-emptive strike against European countries that planned to stop buying from Iran. New talks on Iran's nuclear program are scheduled to begin Saturday.
In Europe, Greece's main stock index shot up more than 3 percent, a blockbuster despite the worker strikes. Indexes fell sharply in France, Germany and Spain.
The yield on the benchmark 10-year Treasury note fell for the fifth straight day, dropping below 2 percent to 1.99 percent. On Monday it was 2.04 percent. The yield's decline is a sign that more investors are piling into safe-haven investments like U.S. government bonds, something investors tend to do when they're worried about the economy.
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