MARKET REPORT

Stocks fall on Asian slowdown

A Barclays PLC trader works Monday on the floor of the New York Stock Exchange. Stock indexes fell in light trading as investors wait for third-quarter earnings reports.
A Barclays PLC trader works Monday on the floor of the New York Stock Exchange. Stock indexes fell in light trading as investors wait for third-quarter earnings reports.

— Investors looked warily at forecasts for poor U.S. corporate earnings and weaker growth in Asia and decided there wasn’t much reason Monday to buy stocks.

The Dow Jones industrial average gave up 26.50 points to close at 13,583.65 points. The Standard & Poor’s 500 index fell 5.05 points to 1,455.88 and the Nasdaq composite lost 23.84 points to 3,112.35.

Falling stocks outnumbered rising ones three to two on the New York Stock Exchange. Consolidated volume was a very light 2.3 billion shares.

Companies in the S&P 500 index are expected to post an overall decline in profits for the first time in 11 quarters, according to FactSet. The third-quarter earnings season starts today when aluminum maker Alcoa releases its results.

Today also marks the five-year anniversary of the record high closes of the Dow and the S&P 500. The S&P, a benchmark tracked by many mutual funds, is currently about 7 percent below its record high. The Dow is about 4 percent below its peak.

Stocks have been on a strong run, with the Dow up 11 percent this year, the S&P 500 nearly 16 percent. But Asia’s slowdown, Europe’s problems, and now forecasts of weak U.S. corporate earnings have caused some investors to wonder whether the stock market has risen too far, too fast.

On top of those concerns, some market leaders, like Apple, have been falling in recent days, noted Bob Pavlik, chief market strategist at Banyan Partners LLC.

“It sort of leads folks into thinking, ‘Why don’t I take a little bit of profit off the table, put it away?’” and maybe re-invest it if third-quarter results turn out to be higher than expected, he said.

Apple closed above $700 on Sept. 18, but has been declining since then. On Monday it fell $14.42 to $638.17.

Also on Monday, the World Bank warned that a “more pronounced slowdown” is possible in China, the world’s second largest economy. It also cut its overall growth forecast for developing countries in Asia.

Slower growth in Asia could drag down the U.S. economy. One of the few bright points for the U.S. during the recession was tremendous growth in export demand by developing nations in Asia and other regions.

While the U.S. economy isn’t doing badly, investors have been counting on growth in Asia for help, said Rex Macey, chief investment officer at Wilmington Trust Investment Advisors. “There was a point where we said, ‘Thank goodness for Asia and China. Their growth can fuel the recovery.’” That’s not so clear anymore, he said.

Stocks and industries that depend most heavily on U.S. economic growth were among the biggest losers Monday. Intel fell 17 cents to $22.51. Home Depot fell $1.32 to $61.88 and Walt Disney lost 64 cents to $52.33.

Truck and engine maker Navistar rose $1.60, or 8 percent, to $22.81 after saying it will add two board members associated with activist investors, heading off a proxy battle.

U.S. government bond trading was closed for the Columbus Day holiday.

Business, Pages 20 on 10/09/2012

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