El Desplome de la UE se vuelve General: todo vuelve a descender

U.S. Stocks Tumble on Global Growth ConcernsQ

By Rita Nazareth - Aug 18, 2011 9:31 AM GMT-0500

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Specialist Daniel O'Donnell, right center, calls out prices at a post on the floor of the New York Stock Exchange on Aug. 16, 2011. Photographer: Richard Drew/AP

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Aug. 18 (Bloomberg) -- James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, talks about the U.S. economy, the stock market and investment strategy. Paulsen, speaking with Erik Schatzker and Maryam Nemazee on Bloomberg Television's "InsideTrack," also discusses Federal Reserve monetary policy. (Source: Bloomberg)

U.S. stocks tumbled amid growing concern the economy is slowing and speculation that European banks lack enough capital, while hopes for more stimulus from the Federal Reserve receded.

Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM)dropped more than 4.6 percent as Sweden's financial regulator said his country's lenders must do more to prepare for a worsening in Europe's debt crisis that could cut off funding. Caterpillar Inc. (CAT) sank 5.6 percent, pacing losses in companies most-tied to economic growth, as jobless claims rose, consumer inflation accelerated more than forecast and the Philadelphia-area manufacturing index fell to the lowest level since March 2009.

The Standard & Poor's 500 Index slumped 4.1 percent to 1,145.07 at 10:29 a.m. in New York. All 10 groups in the S&P 500 dropped at least 1.8 percent. The Dow Jones Industrial Average fell 438.62 points, or 3.8 percent, to 10,971.59. Treasuries rallied, pushing 10-year yields to a record low.

"It's almost like a worldwide buyers strike," Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. "There's a continued general malaise on global economic activity. People continue to downgrade their expectations on growth on a worldwide basis. There's concern about funding problems. That's making us very nervous here and as such we want to take risk out of portfolios at least for the immediate future."

The S&P 500 fell 12 percent from a three-year high on April 29 through yesterday amid concern about Europe's debt crisis and an economic slowdown. Financial, industrial, energy and raw- material producers had the biggest declines during that period, dropping at least 15 percent. Companies less-tied to the economy, including utility, consumer staples and phone providers, slid at least 7.7 percent.

New Lows

U.S. stocks may slip to new lows in the next few weeks, setting the stage for a rally of more than 20 percent in the S&P 500, Tom DeMark, the creator of indicators meant to identify turning points in markets, said in an Aug. 16 interview. The S&P 500, which closed at 1,193.89 yesterday, will probably drop below the 11-month low of 1,119.46 set on Aug. 8 before surging above 1,363.61, its peak on April 29, according to DeMark.

Global stocks tumbled today after Morgan Stanley cut its forecast for global growth this year, citing an "insufficient" policy response to Europe's sovereign debt crisis, weakened confidence and the prospect of fiscal tightening. The bank estimates expansion of 3.9 percent, down from a previous forecast of 4.2 percent, according to a report dated today.

`Dangerously Close'

The U.S. and Europe are "dangerously close to recession," Morgan Stanley analysts including Chetan Ahya said in the note. "Recent policy errors, especially Europe's slow and insufficient response to the sovereign crisis and the drama around lifting the U.S. debt ceiling, have weighed down on financial markets and eroded business and consumer confidence."

Stock-futures extended losses after a report showed that more Americans than forecast filed applications for unemployment benefits last week, signaling the labor market is struggling two years into the economic recovery. Jobless claims climbed by 9,000 to 408,000 in the week ended Aug. 13, the highest in a month, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a rise in claims to 400,000, according to the median forecast.

Home Sales

A separate report showed that the cost of living in the U.S. climbed in July by the most in four months, led by higher energy and food prices. Separately, the Federal Reserve Bank of Philadelphia's general economic index fell more than forecast to minus 30.7 in August from 3.2 the prior month. Readings greater than zero signal expansion in the area covering easternPennsylvania, southern New Jersey and Delaware.

PulteGroup Inc. and Lennar Corp. slumped at least 7 percent after a report showed that sales of previously owned homes unexpectedly dropped in July. Figures from the National Association of Realtors showed purchases of U.S. previously owned homes decreased 3.5 percent in July to a 4.67 million annual rate, the weakest since November.

Most U.S. stocks declined yesterday, wiping out an earlier advance, amid speculation that the Fed may not consider another economic stimulus program to avert a recession. The S&P 500 rose as much as 28 percent after Fed Chairman Ben S. Bernanke foreshadowed on Aug. 27 of last year a second-round of so-called quantitative easing. The Fed finished its second round of asset purchases at the end of June.

`Inappropriate Policy'

Bernanke's pledge last week to keep interest rates near zero percent until mid-2013 was "inappropriate policy at an inappropriate time," Charles Plosser, president of the Fed Bank of Philadelphia, said yesterday in a radio interview on "Bloomberg Surveillance" with Tom Keeneand Ken Prewitt. Dallas President Richard Fisher said the central bank shouldn't enact policy to protect stock investors. Both officials dissented from the Fed's Aug. 9 statement.

American banks tumbled today, following losses in European financial shares. Bank of America, the largest U.S. lender by assets, sank 7.1 percent to $6.93. JPMorgan fell 4.6 percent to $34.89.

The Wall Street Journal reported that American regulators are intensifying scrutiny of the U.S. arms of Europe's largest banks amid concern about Europe's debt crisis, citing people familiar with the matter.

Caterpillar Sinks

Concern about economic growth weighed on companies that are most-dependent on economic growth. The Morgan Stanley (MS) Cyclical Index slumped 6.1 percent as all of its 30 stocks fell. The Dow Jones Transportation Average of 20 stocks, also considered a proxy for the economy, tumbled 5.6 percent. Caterpillar, the world's largest construction and mining-equipment maker, slumped 5.6 percent to $82.77.

A gauge of homebuilders in S&P indexes slumped 6.6 percent. PulteGroup sank 10 percent to $4.22. Lennar dropped 7.3 percent to $13.35.

Gauges of energy and raw-material producers slumped at least 4.6 percent. Oil, wheat and copper led declines in commodity markets on concern that slower economic growth will weaken demand for raw materials. Gold surged to a record as investors fled stocks for the perceived safety of the metal.

Alcoa Inc. (AA), the largest U.S. aluminum producer, decreased 5.7 percent to $11.56. Exxon Mobil Corp. (XOM) fell 4 percent to $71.23.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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