By Laura Mandaro, MarketWatch
U.S. stocks fell further Monday, briefly sending the Dow average
down more than 100 points, after a drop in U.S. home builders'
sentiment added to economic growth worries stemming from cooler
China data.
The Dow Jones Industrial Average(DJI) fell 89 points, or 0.6%,
to 14,778 after hitting an intraday low of 14,753.
Declines deepened after a report showed the National Association
of Home Builders/Wells Fargo housing-market index dropped to 42 in
April from 44 in March, short of a forecast rise to 46.
The S&P 500 (SPX) lost 10 points, or 0.6%, to 1,579. The
Nasdaq Composite (RIXF) sank 22 points, or 0.7%, to 3,273.
China announced gross domestic product for the January-March
quarter grew 7.7% from a year earlier, less than 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, extending Friday's losses
with a decline of more than $100, or 7%. Other metals and oil also
tumbled.
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, followed by other blue chips considered heavily
exposed to China or global resource demand: oil-major Chevron Corp.
(CVX) , Alcoa Corp. (AA) and General Electric Co. (GE)
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.
Citi, Spring, Life
The most high-profile earnings report of the day, plus some deal
news, provided a glimmer of green on traders' screens.
Citigroup Inc. (C) shares rose 2% after the banking company said
first-quarter profit rose 30%. Helped by better capital markets
revenue and fewer losses in businesses it is trying to drop, the
company reported adjusted earnings were $1.29 a share, topping
forecasts of $1.17 a share.
Charles Schwab Corp. (SCHW) shares fell 1% after the retail
brokerage 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.
Shares of Sprint Nextel Corp. (US-S) jumped 13%, the S&P
500's top stock, 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. .
Life Technologies Corp. (LIFE) rose 7.7%, the second best on the
S&P 500, after Thermo Fisher Scientific (TMO) said it would buy
the biotech researcher for about $13.6 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 had held to losses after an Empire State
manufacturing index 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.
After entering bear-market territory on Friday with a 20% drop
from its peak, gold for May delivery (GCK3) was down $103.80, or
7%, to $1,397.60 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 $2.66, or 2.9%, to $88.61 a barrel. Silver
for May delivery (SIK3) skidded $2.90, or 10%, to $23.42 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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