US Markets Drop On Weak Earning And Euro Zone Concern (11-Jul-2012)
The US markets closed lower on Tuesday, for the fourth straight session as pessimism about the earnings season grew coupled with uncertainty over Europe. Besides, confidence among US small companies dropped in June to its lowest point since October, driven by concern that sales and the economy will deteriorate, report showed. The National Federation of Independent Business' optimism index fell to 91.4 from 94.4 in May, the biggest monthly decline in two years. Eight of its 10 components contributed to the slump, the Washington-based group stated. Moreover, job openings increased in May after plunging the prior month, easing concern the US job market was faltering. The number of positions waiting to be filled climbed by 195,000 to 3.64 million, partially countering the 294,000 drop seen in April, the Labor Department stated.
Cummins shares dropped after it reduced its sales forecast, adding to concerns about second-quarter earnings. The engine maker of natural-gas engines forecast flat revenue this year, instead of a prior forecast of 10% growth. It blamed a slowdown in the global economy. Also, concern about technology earnings also weighed on investor sentiment. Advanced Micro Devices Inc. shares fell, after the maker of processors for personal computers reported an unexpected drop in sales.
In Europe, the euro area finance ministers approved the releasing of €30 billion aid to Spain and the bond yield decreased only a fraction from the unsustainable level near 7%. Separately, German Finance Minister Wolfgang Schaeuble argued at the highest German court and urged the panel that any delay in approving measures to expand bailout fund for the euro zone could add volatility to financial markets. German court began hearing about the proposed changes to the European Stability Mechanism are compatible with the German laws. Besides, on an economic front, UK manufacturing rose 1.2 percent from April and industrial output grew 0.8 percent in Italy while French, Swedish and the Netherlands output fell in May. Norwegian inflation remained stable but Romanian consumer price index increased in June.
The Dow Jones Industrial Average closed lower by 83.17 points or 0.65%, at 12,653.10. The S&P 500 finished down by 10.99 points, or 0.81%, to 1,341.47, while the Nasdaq closed down by 29.44 points or 1.00%, to 2,902.33.
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