Stocks Drop on Growing Concern Economy Is Slowing
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Stocks in America posted their biggest two-day drop in more than a month, led by energy companies and miners, on growing concern that the American economy will slow.
Exxon Mobil Corp., the biggest American oil company, and Freeport-McMoran Copper & Gold Inc., the world’s second-largest copper producer, declined on slumping fuel and metals prices. Micron Technology Inc., the biggest American producer of computer-memory chips, fell the most in 11 weeks after an analyst forecast a wider loss. Caterpillar Inc. slid to the lowest since November 27 after Morgan Stanley said construction-equipment sales will slow next year.
The Dow Jones industrial average sank 172.65, or 1.3%, to 13,167.2, marking its first back-to-back drops of more than 100 points since August 15. The Standard & Poor’s 500 index slipped 22.05, or 1.5%, to 1,445.9. The Nasdaq composite index lost 61.28, or 2.3%, to 2,574.46. Five stocks dropped for every one that rose on the New York Stock Exchange. Benchmark indexes in Asia and Europe retreated.
“You’re going to see tight credit markets result in lower economic growth,” the chief investment officer at Vantagepoint Funds in Washington, Wayne Wicker, said. “We’re not going to have the ebullient times that we’ve had in the past.”
Yesterday’s retreat trimmed the S&P 500’s gain for the year to less than 2%, while the Dow is up 5.7% in 2007 and the Nasdaq has gained 6.6%. Treasury notes rose for the first time in four days as a decline in global stocks fueled demand for the safety of government debt.
Exxon lost $1.29 to $89.89 after oil fell for a third day on concern inflation and subprime mortgage losses will reduce economic growth. Crude for January delivery retreated 64 cents, or 0.7%, to settle at $90.63 a barrel in New York.
Freeport-McMoran tumbled $7.20 to $94.91, its biggest drop in a month, after copper fell to a nine-month low.
Micron Technology fell 48 cents, or 5.7%, to $7.89. The company’s product prices have dropped below the cost of production because of an industry glut of dynamic random access memory chips, the main memory in personal computers, an analyst from Jefferies & Co., John Lau, said.
Intel Corp., the world’s biggest maker of computer chips, slumped 57 cents to $25.72. A gauge of semiconductor companies in the S&P 500 fell 2.1% as 17 of its 18 members declined.
Caterpillar Inc. decreased $2.23 to $71.16. Morgan Stanley cut the shares to “underweight” from “equal weight.” American construction equipment volumes and prices will decline in 2008, analysts including Robert Wertheimer wrote in a note to client.
EBay Inc., the largest Web-based auction company, and Amazon.com Inc., the biggest Internet retailer, slumped on signs holiday sales growth online is slowing. ComScore Inc., a research firm, said online spending between November 1 and December 14 rose 18% to $22.7 billion, trailing the firm’s forecast for 20% growth in November and December and last year’s 26% gain.
EBay fell 81 cents to $31.89. Amazon.com declined $3.99, or 4.5%, to $85.09, its steepest tumble since November 9.
A jump in consumer prices and $70 billion in bank losses on mortgage-backed securities has spurred concern that the American economy may slow as spending and borrowing decline. Through the first 11 months of this year, consumer prices rose at an annual rate of 4.2%. That’s up from 2.5% for all of 2006 and, if maintained in December, would be the highest rate in 17 years.