While you were sleeping: More disappointments

Wednesday 24th October 2012

A new day with more disappointing US corporate earnings sent Wall Street lower as investors grew increasingly concerned about the impact of slowing global economic growth.

Shares of DuPont plunged, last 8.9 percent weaker, as did those of Xerox, last down 7.5 percent, while shares of 3M were down 3.7 percent as each posted results that underpinned the impact of the European sovereign debt crisis and slowing growth elsewhere including China.

"Clearly, US companies are feeling the pain as a result of the global slowdown," Bernard Baumohl, managing director and chief global economist at the Economic Outlook Group in Princeton, New Jersey, told Reuters.

In afternoon trading in New York, the Dow Jones Industrial Average sank 1.64 percent, the Standard & Poor's 500 Index fell 1.31 percent, and the Nasdaq Composite Index declined 0.58 percent.

It proved a good environment to auction US Treasuries as investors flocked to the appeal of their perceived safety.

The government's sale US$35 billion of two-year debt drew a yield of 0.295 percent, compared with a forecast of 0.304 percent in a Bloomberg News survey of seven of the Federal Reserve's 21 primary dealers, while the bid-to-cover ratio was 4.02, compared with an average of 3.73 for the past 10 sales.

Meanwhile, Apple unveiled its latest product, the new iPad mini as well as refreshed desktop and laptop computers. Its shares were last 1.3 percent lower. The new iPad will go on sale early next month.

As the Fed's policy committee started a two-day meeting today, the New York Times reported that central bank chief Ben Bernanke has told close friends he probably will not seek a third term even if US President Barack Obama wins a second term in the November 6 election.

In Europe, the Stoxx 600 Index finished the session with a 1.7 percent drop from the previous close. National benchmark stock indexes also fell in the UK, Germany and France, closing with losses of 1.4 percent, 2.1 percent and 2.2 percent respectively.

The mood remains lacklustre among consumers. An index of household sentiment in the euro zone barely budged in October, advancing to minus 25.6 from minus 25.9 in September, according to European Commission initial estimate data. Last month's reading was the worst since May 2009.

Separate data showed that Spain's economy shrank for a fifth consecutive quarter. And Moody's slashed its credit rating on five Spanish regions including Catalonia.

BusinessDesk.co.nz

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