U.S. Stocks Fall On Dismal Retail Report, Slow Global Growth
NEW YORK (AP) — U.S. stocks fell broadly in noon trading Wednesday following a report showing retail sales declined last month and more signs of slowing global growth. Overseas stocks also fell and copper plunged to a five-year low. Investors sought safety in government bonds, pushing down the yield on the 10-year Treasury note down to its lowest level since May 2013.
KEEPING SCORE: The Standard & Poor's 500 index fell 25 points, or 1.3 percent, to 1,997 as of 12:11 p.m. Eastern time. The Dow Jones industrial average dropped 276 points, or 1.6 percent, to 17,336. The Nasdaq composite fell 43 points, or 0.9 percent, to 4,618.
SLUMPING SALES: The Commerce Department reported early Wednesday that retail sales fell 0.9 percent in December, the biggest decline since January last year. The drop shows consumers are reluctant to spend despite lower gas prices and a pickup in hiring.
THE QUOTE: "That retail sales number really surprised people," said Peter Tuz, a portfolio manager at Chase Investment Counsel, which manages $400 million in assets. "There was a perception that the economy was improving, but that has gotten called into question."
BANKING BLUES: JPMorgan Chase fell $2.66, or 4.5 percent, to $56.18 after reporting a 7 percent drop in fourth-quarter earnings. The bank was hit by more legal costs and a decline in trading revenue.
THE HOUSE LOSES: Caesars Entertainment fell 55 cents, or 4.4 percent, to $12.08 on expectations that an operating unit of the giant casino company will file for bankruptcy this week. Caesars has lost money each year for the last five years, and is fighting with lenders over plans to cut its debt.
DISMAL FORECAST: A report from the World Bank late Tuesday after markets closed struck a downbeat note. The bank lowered its forecast for global growth this year to 3 percent from 3.4 percent. It blamed sluggish economies in Europe and Japan, and a slowdown in China.
COPPER CAPITULATES: The price of copper, a metal used in many industries, plunged for a second day following the World Bank's downgrade. It fell 5 percent to $2.51 a pound. Mining stocks fell sharply as a result. Freeport-McMoRan plunged $2.34, or 11 percent, to $18.70.
EUROPE FALLS: France's CAC 40 fell 1.6 percent while Germany's DAX fell 1.2 percent. Britain's FTSE 100 dropped 2.3 percent, underperforming its peers because miners make up a big chunk of the index.
EUROPEAN COURT RULING: The euro dropped to a nine-year low of $1.1725, below its launch rate of $1.1747. It recovered to trade slightly up on the day at $1.1813. The trigger for the decline was a ruling from an advocate general with the European Court of Justice that the European Central Bank's offer in 2012 to buy government bonds of troubled countries is legal in principle.
Analysts said that ruling has cleared the way for the ECB to announce a program to buy government bonds at its Jan. 22 policy meeting.
ASIA'S DAY: Japan's Nikkei 225 dropped 1.7 percent and South Korea's Kospi edged down 0.2 percent. The Hang Seng in Hong Kong slipped 0.4 percent. The Shanghai Composite index dropped 0.4 percent.
ENERGY: U.S. crude fell 20 cents, to 0.4 percent, to $45.68 a barrel on the New York Mercantile Exchange. Stocks markets have been rattled in recent weeks as the price of oil plunged. Crude is now 57 percent lower than where it was last June.
BONDS: The yield on the 10-year Treasury note dropped to 1.81 percent from 1.90 percent late Tuesday, a large move.
– by AP Reporter Bernard Condon