Stocks falter ahead of earnings

In Uncategorized on July 9, 2012 at 5:12 pm

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NEW YORK (CNNMoney) — U.S. stocks dropped Monday, as investors remained wary ahead of quarterly corporate results and another eurozone meeting.

Industrial and energy shares led the declines, with Chevron (CVX, Fortune 500), DuPont (DD, Fortune 500), Caterpillar (CAT, Fortune 500) and Exxon Mobil (XOM, Fortune 500) all down between 1% and 2%.

The Dow Jones industrial average (INDU) dropped 41 points, or 0.3%. The SP 500 (SPX) moved down 3 points, or 0.2%. The Nasdaq (COMP) dropped 8 points, or 0.2%.

After 63 out of 103 companies lowered projections for earnings, investors are growing increasingly nervous about what Corporate America will say when second quarter earnings season unofficially kicks off, with aluminum producer and Dow component Alcoa (AA, Fortune 500) after the market close Monday.

“Investors are growing jittery before earnings seasons,” said Ryan Detrick, Senior Technical Strategist at Schaeffer’s Investment Research. “There’s a concern that the European slowdown has made its way to the U.S.”

Overall, analysts are expecting underwhelming corporate results, with earnings dropping off compared to the first quarter.

Results are due later in the week from search giant Google (GOOG, Fortune 500) and banking leaders JPMorgan (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500).

Meanwhile, investors have new reasons to be worried over Europe’s fiscal health. Early Monday, the yield on the 10-year Spanish bond rose above 7% again — a level that Spain’s prime minister has previously called unsustainable.

Increasing pressures in Spain’s bond market comes as finance ministers from eurozone countries start a two-day meeting Monday. Leaders will hammer out details about how money from the European Stability Mechanism can be used to bail out troubled banks in struggling eurozone nations.

“While we’ve seen some positive steps in Europe, a lot of these steps address short-term problems,” said Ryan Larson, head of equity trading at U.S. RBC Global Asset Management in Chicago. “There’s continued nervousness in the global marketplace because there’s a sense these are short-term fixes at best.”

Meanwhile, China’s consumer price index rose at a modest 2.2% annual rate in June. The lower inflation rate serves as yet another signal of a global slowdown.

U.S. stocks fell Friday following a weaker-than-expected monthly jobs report. The U.S. economy added just 80,000 jobs in June, not enough to keep up with population growth.

World markets: European stocks slid in late afternoon trading. Britain’s FTSE 100 (UKX) shed 0.7%, the DAX (DAX) in Germany edged lower 0.1% and France’s CAC 40 (CAC40) slipped 0.4%.

Asian markets reacted to the U.S. jobs report and global growth concerns, ending Monday in the red. The Shanghai Composite (SHCOMP) tumbled 2.4%, while the Hang Seng (HSI) in Hong Kong dropped 1.9% and Japan’s Nikkei (N225) fell 1.4%.

Economy: The Federal Reserve will release data on consumer credit for May at 3 p.m. ET. Analysts surveyed by expect consumer credit to have expanded by $9.5 billion for the month, after growing by $6.5 billion in April.

Companies: Shares of health care provider Amerigroup (AGP, Fortune 500) soared 38% after the company announced it would be acquired by WellPoint (WLP, Fortune 500) for $4.9 billion. The deal comes less than a month after last month’s U.S. Supreme Court health reform decision, which will change the landscape of the country’s health care system.

Shares of Campbell Soup (CPB, Fortune 500) dropped after the company announced it would acquire organic juice maker Bolthouse Farms for $1.55 billion.

After the closing bell, analysts surveyed by Thomson Reuters expect Alcoa to report earnings of 5 cents a share, down from 32 cents a year earlier, on $5.8 billion in revenue.

Currencies and commodities: The dollar fell against the euro, British pound and Japanese yen.

Oil for August delivery rose 21 cents to $84.68 a barrel.

Gold futures for August delivery rose $9.50 to $1,588.20 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 1.53% from 1.54% late Friday.  To top of page

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