U.S. stocks fall as reports damp global economic optimism; Exxon declines

March 13, 2011 - 0:0

U.S. stocks fell this week, sending the Standard & Poor’s 500 Index to the lowest level since Jan. 31, after American and Chinese reports damped optimism about the global economy.

Equities pared their weekly decline Friday as fuel, metal and industrial companies helped the market overcome a global slump that followed Japan’s worst earthquake on record. Exxon Mobil Corp. (XOM) lost 3.5 percent since March 4, leading the Dow Jones Industrial Average lower, as oil fell 3.1 percent. Finisar Corp. (FNSR) plunged 46 percent, driving down networking companies such as JDS Uniphase Corp. (JDSU), after its profit forecast trailed analysts’ estimates.
The S&P 500 slipped 1.3 percent to 1,304.28 after closing at an almost six-week low of 1,295.11 on March 10. It surged 28 percent between Aug. 26 and Feb. 18 before slumping 2.9 percent. The Dow retreated 125.48 points, or 1 percent, to 12,044.40 this week after U.S. jobless claims increased more than forecast, the American trade deficit widened and China’s export growth slowed.
""We’ve had a long run of the market going up,"" said Giri Cherukuri, a money manager and head trader at Oakbrook Investments LLC in Lisle, Illinois, which oversees $2.7 billion. ""It was more the trade deficit number that affected the market - - the idea that the economy is not growing as much.""
The S&P 500 pared its 2011 gain to 3.7 percent this week as the bull market began its third year. The benchmark measure of U.S. equities has rallied 93 percent since sinking to a 12-year low on March 9, 2009, amid government stimulus measures and corporate profits that beat analysts’ estimates for eight straight quarters.
--------------Jobless claims
The Labor Department on March 10 said applications for first-time unemployment benefits rose by 26,000 to 397,000 in the week ended March 5. Economists forecast claims would climb to 376,000, according to the median estimate in a Bloomberg News survey. The Commerce Department said on March 10 the trade deficit in goods and services rose 15 percent to $46.3 billion in January as a surge in imports led by costlier oil overshadowed record exports.
China’s unexpected $7.3 billion trade deficit on March 10 was the biggest in seven years, buttressing the government’s case against U.S. arguments for faster gains in the yuan.
Oil slumped 1.5 percent to $101.16 a barrel Friday after falling 3.6 percent intraday for its biggest drop since November, as the earthquake in Japan shut refineries in the world’s third-largest oil-consuming nation. Oil had risen to a 29-month peak on March 7.
------------‘Fairly resilient’
“There’s Japan, combined with continued challenges in emerging markets and the bigger issue of what happens in the Middle East,” said Bill McVail, a money manager at Berwyn, Pennsylvania-based Turner Investments with $18 billion in assets. “But the market is fairly resilient and able to process a lot of negative macro data points in an orderly fashion, it doesn’t feel like we have sellers out of control.”
Falling oil prices drove declines in fuel companies, with the S&P 500 Energy Index (S5ENRS) losing 4 percent. Exxon Mobil, the world’s biggest company by market value, dropped 3.5 percent to $82.12. Chevron Corp. (CVX), the second-largest U.S. oil company, fell 3.7 percent to $99.93 for the biggest loss in the Dow.
Finisar, the U.S. maker of fiber-optic transmission gear, tumbled the most since its initial public offering in 1999. It said earnings per share excluding one-time items will probably be 31 cents to 35 cents this quarter. Analysts predicted 48 cents a share, according to the average of estimates compiled by Bloomberg.
Finisar lost 46 percent to $23.21. JDS Uniphase slumped 22 percent to $21.26.
-----------Semiconductors fall
A gauge of semiconductor stocks fell 5.7 percent, the most among 24 groups in the S&P 500, after Wells Fargo cut its industry rating to “market weight” from “overweight,” citing the 125 percent gain in the Philadelphia Semiconductor Index over the last two years. The downgrade “is more an indication of a more moderate though still optimistic view of the sector rather than any active concern about the chip stocks as a group.”
The stock market’s drop doesn’t seem to have “significant downside implications,” said Craig Peskin, co-head of technical analysis at MF Global Inc. “Some indicators are getting to minor oversold conditions. It’s not the start of a significant decline, more like an interruption in the uptrend of the bull market.”
Sprint Nextel Corp. (S), the third-largest U.S. wireless provider, advanced 15 percent to $5 for the biggest gain in the S&P 500. Deutsche Telekom AG has held talks to sell its T-Mobile USA unit to Sprint Nextel Corp. in exchange for a major stake in the combined entity, said people with knowledge of the matter.
AT&T Inc. (T), the biggest U.S. wireless carrier, led gains in the Dow with a 1.9 percent increase to $28.46. Bank of America Corp. (BAC), the biggest U.S. lender by assets, posted the second- biggest gain in the Dow, advancing 1.8 percent to $14.38.
(Source: Bloomberg)