By Laura Mandaro, MarketWatch
U.S. stocks tumbled at the open Monday, pulled lower by China
data showing the industrial juggernaut's growth was slowing.
Citigroup earnings and some merger activity limited losses, while
gold prices dove.
The Dow Jones Industrial Average(DJI) fell 73 points, or 0.5%,
to 14,792. The S&P 500 (SPX) lost 9 points, or 0.6%, to 1,580.
The Nasdaq Composite (RIXF) sank 15 points, or 0.5%, to 3,280.
China announced gross domestic product for the January-March
quarter grew 7.7% from a year earlier, short of forecasts calling
for growth of 8%, while industrial production in April slowed to
8.9%, the weakest in more than a year.
Gold was the hardest hit by that news, deeply extending Friday's
losses. On the S&P 500, resource stocks including Newmont
Mining Corp. (NEM) and Freeport McMoRan Copper & Gold Inc.
(FCX) led losses. On the Dow, heavy equipment maker Caterpillar
Inc. (CAT) fell the most.
The China data "set the negative tone off for stocks," said Nick
Raich, chief executive officer of The Earnings Scout.
"The slower-than-expected growth coming out of China is putting
on fears that maybe there's a little bit of a slowdown occurring. I
don't think we should be terribly surprised," he said, pointing to
underperforming emerging-market stocks and commodities as
indicators for a slowdown in global growth.
Citigroup Inc. (C) shares rose 2%. The bank reported adjusted
earnings of $1.29 a share, which topped forecasts of $1.17 a
share.
Charles Schwab Corp. (SCHW) posted first-quarter net income of
15 cents on revenue of $1.29 billion. Forecasts were calling for
net income of 16 cents on sales of $1.27 billion.
"The market is keeping its level, hoping for upside surprises in
earnings--however the only trend so far has been to beat earnings
estimate but failing on revenue, meaning a considerable part of the
earnings beating comes from one-off or changes to accounting--not
exactly the underlying growth and profit trends we do need to
sustain these elevated stock prices," said Steen Jakobsen, chief
economist at Saxo Bank, in emailed comments.
U.S. stock futures held to losses after Empire State showed
manufacturing activity nudged higher in the New York region. The
index fell to 3.1 points in April from 9.2 in March, below
forecasts calling for an index of 7.8 and the slowest reading since
January.
The National Association of Home Builders home-builders index is
due at 10 a.m. Eastern.
Deal news was also in focus on Monday. Shares of Sprint Nextel
Corp. (US-S) jumped 17% after Dish Network Corp. (DISH) said it
would offer $25.5 billion for Sprint, in a bid to derail an
acquisition for the group by Softbank Corp. of Japan.
After entering bear-market territory on Friday with a more than
4% drop, gold for May delivery (GCK3) was down 6%, or $95, to
$1,405.70 an ounce, undermined by the China data, which added to
already negative sentiment.
"Investors are clearly turning away from gold here, using the
price action as justification for unwinding positions and taking
capital away from what was once considered as almost a one-way
bet," said David White, financials trader at SpreadEx in a note.
"Even those naturally contrarian are struggling to find reasons to
own gold."
It was among many asset classes being hit hard. In addition to
losses for Asia and European markets, led by mining stocks, oil for
May delivery was down $2.36, or 2.6%, to $89.12 a barrel. Silver
for May delivery (SIK3) skidded $2.60, or nearly 10%, to $23.78 an
ounce.
The Australian dollar was most impacted by weak China data,
while the U.S. dollar continued to back away from four-year highs
reached last week against the Japanese yen after the U.S. Treasury
Department on Friday warned Japan not to actively devalue its
currency.
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