US stocks fall on concern rally outpaced recovery prospects
Sunday, 16 August 2009
NEW YORK, Aug. 15 (Bloomberg): US stocks slid, capping the first weekly drop for the Standard & Poor's 500 Index in more than a month, as lower-than-estimated consumer confidence added to concern a five-month rally outpaced prospects for the economy.
Boeing Co., the world's second-largest commercial airplane manufacturer, led declines in the Dow Jones Industrial Average after saying it found flaws in 23 of its 787 Dreamliners.
Alcoa Inc., Home Depot Inc. and Caterpillar Inc. also slumped as all 10 industries in the S&P 500 decreased. J.C. Penney Co. retreated 6.2 per cent after its forecast trailed estimates.
"A lot of people think the market has come up more than enough and it needs to rest," said Charles Knott, chief investment officer at Knott Capital Management in Exton, Pennsylvania, who oversees about $550 million. "We've got a pretty sobering outlook and are concerned about the economy on a long-term basis. We think there's neither the willpower nor the means to fully finance that type of V-shape recovery."
The S&P 500 tumbled 0.9 per cent to 1,004.09 at 4:08 p.m. in New York, leaving it down 0.6 per cent over the past five days in its first weekly retreat since July 10. The Dow industrials lost 76.79 points, or 0.8 per cent, to 9,321.4. Treasuries rose for a second day.
The S&P 500 retreated from a 10-month high after consumer confidence fell in August for the second straight month as concern over jobs and wages grew. The Reuters/University of Michigan preliminary index of sentiment fell to 63.2 from 66 the month before. Economists had forecast a rise to 69, according to the average estimate in a Bloomberg News survey.
US stocks are "dramatically overpriced" because the fallout from the financial crisis will continue to hurt consumer spending, said David Tice, Federated Investors Inc.'s chief portfolio strategist for bear markets. Tice, who predicts that the S&P 500 will eventually slump to 400, said he would add to short positions if the market goes any higher.
"I'd love for prosperity to return, unfortunately I think you need to be realistic and it takes time to work off these excesses" from a bubble in credit markets, Tice said in an interview with Bloomberg Television.
Pacific Investment Management Co.'s Mohamed El-Erian said stock market investors are overly optimistic. Current market valuations aren't warranted by the economic outlook for 2010, El-Erian, co-chief investment officer at Pimco, told CNBC.
Boeing Co., the world's second-largest commercial airplane manufacturer, led declines in the Dow Jones Industrial Average after saying it found flaws in 23 of its 787 Dreamliners.
Alcoa Inc., Home Depot Inc. and Caterpillar Inc. also slumped as all 10 industries in the S&P 500 decreased. J.C. Penney Co. retreated 6.2 per cent after its forecast trailed estimates.
"A lot of people think the market has come up more than enough and it needs to rest," said Charles Knott, chief investment officer at Knott Capital Management in Exton, Pennsylvania, who oversees about $550 million. "We've got a pretty sobering outlook and are concerned about the economy on a long-term basis. We think there's neither the willpower nor the means to fully finance that type of V-shape recovery."
The S&P 500 tumbled 0.9 per cent to 1,004.09 at 4:08 p.m. in New York, leaving it down 0.6 per cent over the past five days in its first weekly retreat since July 10. The Dow industrials lost 76.79 points, or 0.8 per cent, to 9,321.4. Treasuries rose for a second day.
The S&P 500 retreated from a 10-month high after consumer confidence fell in August for the second straight month as concern over jobs and wages grew. The Reuters/University of Michigan preliminary index of sentiment fell to 63.2 from 66 the month before. Economists had forecast a rise to 69, according to the average estimate in a Bloomberg News survey.
US stocks are "dramatically overpriced" because the fallout from the financial crisis will continue to hurt consumer spending, said David Tice, Federated Investors Inc.'s chief portfolio strategist for bear markets. Tice, who predicts that the S&P 500 will eventually slump to 400, said he would add to short positions if the market goes any higher.
"I'd love for prosperity to return, unfortunately I think you need to be realistic and it takes time to work off these excesses" from a bubble in credit markets, Tice said in an interview with Bloomberg Television.
Pacific Investment Management Co.'s Mohamed El-Erian said stock market investors are overly optimistic. Current market valuations aren't warranted by the economic outlook for 2010, El-Erian, co-chief investment officer at Pimco, told CNBC.