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Dow Falls to Third Triple-Digit Loss

by on July 24, 2012 9:26 pm BST
 

NEW YORK—The Dow slid to its third straight triple-digit point decline as poor corporate-earnings underscored growth worries and concerns mounted about Greece’s ability to pay its debts.

The Dow industrials tumbled for the third session in row, hurt by weak manufacturing data and festering worries that Greece won’t be able to pay its debts. Steven Russolillo has details on The News Hub.

The Dow Jones Industrial Average fell 104.14 points, or 0.8%, to 12617.32 points, though the blue-chip benchmark trimmed its losses in Tuesday’s final minutes after The Wall Street Journal reported that the Federal Reserve is moving closer to taking additional action to boost the economy.

For the Dow, Tuesday’s drop extends to three its streak of consecutive sessions with declines of greater than 100 points, the longest since September.

The Standard & Poor’s 500-stock index fell 12.21 points, or 0.9%, to 1338.31, the Nasdaq Composite Index dropped 27.16 points, or 0.9%, to 2862.99.

Telecommunications stocks lagged most as all 10 of the S&P 500’s sectors retreated. AT&T

dropped reporting second-quarter earnings that were above consensus analyst estimates, though revenue missed Wall Street’s view.

Bellwether United Parcel Service

declined after the package-delivery company’s second-quarter earnings and revenue missed estimates, and it lowered its full-year earnings outlook, citing increasing economic uncertainty in the U.S. and continued weakness in Asia.

Apple reports after the bell today. Steven Russolillo joins Markets Hub to discuss why analysts are toning down their expectations on the tech giant. Photo: Reuters.

Dow component DuPont

stumbled after the chemical company’s second-quarter earnings also topped estimates but revenue fell short of expectations. In addition, the company said full-year earnings would be at the low end of its previously provided range.

Texas Instruments

fell after the microchip maker reported second-quarter earnings that beat forecasts, but revenue fell short and the company indicated that third-quarter revenue would be below current projections.

“There are definitely headwinds and caution in what managements are forecasting for the rest of the year,” said Tim Evnin, partner at Evercore Wealth Management.

Major benchmarks extended declines minutes after the opening bell after the Richmond Federal Reserve Bank offered a reading on Central-Atlantic manufacturing in July that showed a sharp contraction. Earlier, Markit Economics’ preliminary July reading on the U.S. factory sector showed it barely expanded.

Losses widened around midday after a Reuters report that Greece will need to restructure its debt again, citing European Union officials. The report compounded anxieties stirred in recent days about Greece’s future membership in the euro zone and Spain’s rising borrowing costs.

The Dow had fallen nearly 200 points late in the session, but stocks came back from session lows after the Journal reported that Fed officials “appear increasingly inclined” to shore up the economy.

“It looks like hopes for QE3,” said Keith Springer, president of Springer Financial Advisors, referring to quantitative easing, the central bank’s asset-purchase program. “The thing is, the Fed’s liquidity has had a diminishing effect.”

The reports on Greece accelerated declines across European markets, which were already lower after the Continent’s own discouraging manufacturing data. The Stoxx Europe 600 shed 0.5%, losing ground for the third session in a row. Earlier, Markit’s preliminary factory-sector reading for the euro zone was unchanged in July, indicating a sixth consecutive month of contraction. In Germany, the measure slipped in July from June.

Earnings are expected to slide this season, leading to what could be the worst season since 2009. But a big quarter from Apple might change everything around, as Steven Russolillo reports on Markets Hub. Photo: Bloomberg.

Asian markets were mixed. The Shanghai Composite rose 0.2% after HSBC’s preliminary July reading on China’s factory-sector rose to the strongest level in five months. Meanwhile, Japan’s Nikkei Stock Average slipped 0.2%.

Crude-oil futures gained 0.4% to $88.50 a barrel, while gold futures fell 0.1% to settle at $1,576.00 a troy ounce. The U.S. dollar rose against the euro as the common currency hit a fresh two-year low against the greenback. Investors snapped up bonds, driving down the yield on 10-year U.S. Treasurys to 1.404%. On Monday, yields on the benchmark 10-year notes hit a record low.

Among other stocks, Whirlpool

dropped after the company’s second-quarter profits fell short of Wall Street forecasts.

Cisco Systems

sank, becoming the biggest decliner on the Dow, after the networking company said on Monday that it would lay off about 1,300 employees.

DeVry

tumbled after the for-profit education company indicated fiscal fourth-quarter earnings would fall well short of analyst estimates compiled by FactSet, and said it would eliminate about 570 jobs, citing continued softness in enrollment trends.

Write to Chris Dieterich at christopher.dieterich@dowjones.com