Wall Street drops again, data raises growth concerns
By Ryan Vlastelica | February 22, 2013 5:35 AM EST
U.S. stocks fell on Thursday and were on track for their biggest two-day decline since November as weak data suggested expectations for economic growth were overly optimistic.
The two-day decline marked the U.S. stock market's first sustained pullback this year. The Standard & Poor's 500 is up 5.2 percent so far this year. The benchmark index has climbed for seven straight weeks, putting it near five-year highs.
In the latest economic data, initial claims for unemployment benefits rose more than expected last week while the Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. mid-Atlantic region fell in February to minus 12.5, the lowest in eight months.
"The Philly Fed report was troublingly weak, and adds to concerns about whether growth will remain up," said Brad Sorensen, director of market and sector analysis at Charles Schwab in Denver. "The only growth we're seeing is sluggish."
On Wednesday, the S&P 500 and the Nasdaq posted their worst daily declines of the year after the minutes from the Federal Reserve's most recent meeting sparked concerns that the central bank may rein in its economic stimulus measures.
"The upside momentum in markets appears to be coming to an end as we consolidate recent gains," said Adam Sarhan, chief executive at Sarhan Capital in New York. "If the S&P breaks under its 50-day moving average, something more serious could be in store."
The S&P 500 would need to fall 1.9 percent to reach that level of 1,473.58.
Other reports showed consumer prices were flat in January while existing-home sales edged higher and left the inventory of homes at the lowest level in 13 years.
Wal-Mart Stores Inc
The Dow Jones industrial average <.DJI> was down 70.03 points, or 0.50 percent, at 13,857.51. The Standard & Poor's 500 Index <.SPX> was down 11.23 points, or 0.74 percent, at 1,500.72. The Nasdaq Composite Index <.IXIC> was down 36.50 points, or 1.15 percent, at 3,127.92.
The benchmark S&P 500 index has dropped 1.9 percent over the past two sessions, the biggest two-day decline since November.
Wall Street will soon face another test with the upcoming debate in Washington over the automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. Those cuts, set to kick in on March 1 unless lawmakers agree on an alternative, are expected to depress economic growth.
Semiconductor stocks ranked among the weakest of the day, pressuring the Nasdaq as the Philadelphia Semiconductor index <.SOX> fell 1.8 percent. Intel Corp
The semiconductor sector has performed well so far in 2013, rising 8.4 percent.
In company news, shares of supermarket operator Safeway Inc
In contrast, shares of VeriFone Systems Inc
Of the 427 companies in the S&P 500 that have reported results so far, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data through Thursday morning.
Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.
Berry Petroleum Co
(Editing by Kenneth Barry and Jan Paschal)
Join the Conversation
- Russia's New Tactical Nuclear Weapons Program Growing Confident Against the US: Talks of World War III
- Apple and Google Engage in Thermonuclear War, New Google Translate Chat App in the Works
- Walmart Offers the Best 2014 Black Friday Deals on iPhone 6, iPad Ai2 & Other Gadgets – Reports
- Chris Algieri’s Battered Face Trends On Social Media
- Update Samsung Galaxy S5 to Android 4.4.4 KitKat, Sprint Release and Installation
- Highest Paid NBA Players 2014: NBA Stars Who Earn More Than LeBron James
- More Nexus 6 Problems Arise with Android 5.0 Lollipop, Poor Benchmark Results and Other Issues