US stocks decline a second day as Chinese shares, oil tumble
Friday, 31 July 2009
NEW YORK, July 30 (Bloomberg): US stocks fell for a second day as plunging Chinese shares and commodities stoked speculation that the surge in equities has outpaced the economy.
Alcoa Inc., the largest US aluminum producer, and Exxon Mobil Corp. declined as copper dropped 1.7 per cent and oil slumped the most in three months. Yahoo! Inc. sank 12 per cent after its deal to use Microsoft Corp.'s search technology didn't include an upfront payment. Stocks briefly extended their drop as the Treasury paid a higher borrowing rate to fund its economic rescue program.
The Standard & Poor's 500 Index slipped 0.5 per cent to 975.15 at 4 p.m. in New York. The Dow Jones Industrial Average fell 26 points, or 0.3 per cent, to 9,070.72. The Shanghai Composite Index sank 5 per cent, the most since November, dragging down shares in emerging markets. Global equities have moved by lockstep by an unprecedented degree this year, according to Bloomberg data.
"China has been the epicenter for marginal growth in the global economy, so weakness there would take the edge off sentiment around the world," said Liam Dalton, who oversees about $1.1 billion as the New York-based chief executive officer of Axiom Capital Management. "This has not been a very high- quality rally. Money has been chased into the market, so a setback would be normal."
The S&P 500 has surged 44 per cent since March 9. While the Federal Reserve's Beige Book business survey today showed most of the 12 regional banks detected a slower pace of economic decline in June and July, it also said retail demand was "sluggish" in most areas and auto sales were "mixed." The jobless rate has risen to 9.5 per cent, the highest since August 1983, and is forecast to top 10.1 per cent in the first quarter of 2010, based on the median economist estimate compiled by Bloomberg.
Stocks in China plunged on speculation the government will curb inflows into a market that had doubled from last year's low. The benchmark gauge, which has surged 79 per cent this year, tumbled 5 per cent to end a five-day, 7 per cent advance that pushed valuations to the highest since January 2008.
Alcoa Inc., the largest US aluminum producer, and Exxon Mobil Corp. declined as copper dropped 1.7 per cent and oil slumped the most in three months. Yahoo! Inc. sank 12 per cent after its deal to use Microsoft Corp.'s search technology didn't include an upfront payment. Stocks briefly extended their drop as the Treasury paid a higher borrowing rate to fund its economic rescue program.
The Standard & Poor's 500 Index slipped 0.5 per cent to 975.15 at 4 p.m. in New York. The Dow Jones Industrial Average fell 26 points, or 0.3 per cent, to 9,070.72. The Shanghai Composite Index sank 5 per cent, the most since November, dragging down shares in emerging markets. Global equities have moved by lockstep by an unprecedented degree this year, according to Bloomberg data.
"China has been the epicenter for marginal growth in the global economy, so weakness there would take the edge off sentiment around the world," said Liam Dalton, who oversees about $1.1 billion as the New York-based chief executive officer of Axiom Capital Management. "This has not been a very high- quality rally. Money has been chased into the market, so a setback would be normal."
The S&P 500 has surged 44 per cent since March 9. While the Federal Reserve's Beige Book business survey today showed most of the 12 regional banks detected a slower pace of economic decline in June and July, it also said retail demand was "sluggish" in most areas and auto sales were "mixed." The jobless rate has risen to 9.5 per cent, the highest since August 1983, and is forecast to top 10.1 per cent in the first quarter of 2010, based on the median economist estimate compiled by Bloomberg.
Stocks in China plunged on speculation the government will curb inflows into a market that had doubled from last year's low. The benchmark gauge, which has surged 79 per cent this year, tumbled 5 per cent to end a five-day, 7 per cent advance that pushed valuations to the highest since January 2008.