Fin24

More profit warnings hit Wall Street

2012-07-11 08:24

New York - US stocks fell for a fourth day on Tuesday as more pessimism from US companies compounded worries the sluggish world economy is taking a toll on US profit growth.

A sales warning from engine maker Cummins came on top of earlier weak forecasts from chipmakers Applied Materials and Advanced Micro Devices, causing the market to extend losses in afternoon trading.

The news sent the S&P 500 down for a fourth consecutive day, the index's longest downward streak since May when it fell for six straight days.

Shares of industrials fell the most at 1.6%. Cummins was among the biggest losers, declining 8.9% to $86.91.

"The selloff really started with Cummins," said Ryan Detrick, technical analyst at Schaeffer's Investment Research, in Cincinnati. It was "basically reiterating the concerns that we've had going into earnings, like how the European issues are really starting to have an impact on the US."

Recent data showing slower growth in Europe, China and the United States has weighed on the stock market, while US companies have warned about overseas weakness and a stronger dollar hurting companies that rely heavily on exports.

Alcoa, which kicked off the earnings period, fell 4.1% to $8.40, a day after it reported a quarterly loss and lower sales.

The S&P 500 ended at technical support, which is seen in the 1,340-1,345 range, according to Robert Sluymer, analyst at RBC Capital Markets in New York. The 50-day moving average at 1,337 is also eyed as support where clusters of buying would be expected.

The Dow Jones industrial average was down 83.17 points, at 12,653.12. The Standard & Poor's 500 Index was down 10.99 points, at 1,341.47. The Nasdaq Composite Index was down 29.44 points, at 2,902.33.

Bank stocks also declined, with the euro hitting a two-year low against the dollar amid uncertainty about progress in tackling the eurozone crisis. The KBW Bank index fell 0.9%.

Cummins cut its full-year sales forecast, citing weakness overseas and a stronger dollar.

Advanced Micro Devices tumbled 11.2% to $4.99 after the chipmaker slashed its outlook for second-quarter revenue following disappointing sales in China and Europe.

Applied Materials lost 2.7% to $10.71 after the chip-equipment maker said it expects to miss its full-year estimates and its third-quarter results will be at the low end of its previous outlook. The PHLX semiconductor index fell 2%.

US-listed shares of Research In Motion fell 5% to $7.29 in US trading. The BlackBerry maker's shareholders elected the company's slate of directors at its annual meeting - the first presided over by new Chief Executive Thorsten Heins, who faces an uphill battle to get the embattled company back on track.

Volume was lighter than average. About 6.22 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, compared with the year-to-date daily average of 6.85 billion shares.

Decliners beat advancers by a ratio of about 2 to 1 on both the NYSE and Nasdaq.