U.S. Stocks Fall as Investors Weigh Timing of Fed Cuts
<cite class="byline" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 11px; vertical-align: baseline; background-color: transparent; width: 640px; color: rgb(111, 111, 111); display: block; font-style: normal; line-height: 1.3em; position: static !important; background-position: initial initial; background-repeat: initial initial;">By Tom Stoukas & Nick Taborek - Aug 7, 2013 9:45 PM GMT+0800</cite>
U.S. stocks declined, extending a drop in the Standard & Poor’s 500 Index (SPX) to a third day, amid investor speculation the Federal Reserve will pare bond purchases as the economy strengthens.
First Solar Inc. tumbled 11 percent after the largest U.S. solar-panel manufacturer said profit fell.Zillow Inc. (Z) plunged 9.1 percent after reporting a second-quarter loss. Walt Disney Co. dropped 3.1 percent after third-quarter profit was little changed from the same time a year earlier. Time Warner Inc. added 2.5 percent as earnings surpassed analyst estimates.
The S&P 500 slid 0.3 percent to 1,691.75 at 9:45 a.m. in New York. The benchmark gauge has fallen 1 percent this week after closing at a record on Aug. 2. The Dow Jones Industrial Average decreased 62.28 points, or 0.4 percent, to 15,456.46 today. Trading in S&P 500 stocks was 3.7 percent below the 30-day average at this time of day.
“It seems that some tapering scare is reentering the stage in the shape of somewhat hawkish Fed comments,” Witold Bahrke, a Copenhagen-based senior strategist at PFA Pension A/S, which manages about $55 billion, wrote in an e-mail. “For now, this tapering scare together with an element of profit-taking trumps impressive macro numbers.”
The S&P 500 sank the most in six weeks yesterday as trade data and comments from a Fed official fueled concern the central bank may reduce the pace of its monthly bond buying this year. Fed Bank of Chicago President Charles Evans, a proponent of monetary stimulus, said he would not rule out a decision to begin tapering in September. Fed Bank of ClevelandPresident Sandra Pianalto speaks on monetary policy and the economic outlook in Cleveland at 1:30 p.m. local time today.
Carney Stimulus
Central bank policy makers have been debating the pace and timing of any cuts in the monetary stimulus that has helped propel the S&P 500 up more than 150 percent from its bear-market low in 2009. The Fed said last week that persistently low inflation could hamper the economy and pledged to keep buying bonds every month. Tapering of the pace of asset purchases may begin in September, according to a growing number of economists surveyed by Bloomberg from July 18 to July 22.
In the U.K., Bank of England Governor Mark Carney linked the monetary-policy outlook to unemployment for the first time and pledged to expand stimulus measures if needed as he tried to quell investor bets on higher interest rates.
Eleven members of the S&P 500 report results today. Of the 432 companies in the gauge to have already reported, 72 percent have exceeded analysts’ profit estimates and 56 percent have beaten sales projections, data compiled by Bloomberg show.
Disney Profit
Disney fell 3.1 percent to $64.99 for the steepest decline in the Dow. The world’s biggest entertainment company said third-quarter profit was little changed from the same time last year amid costs to market the box-office disappointment “The Lone Ranger” and shrinking revenue at ABC television network.
First Solar (FSLR) plunged 11 percent to $41.77. Second-quarter net income fell to $33.6 million from $111 million a year earlier, the Tempe, Arizona-based company said. Excluding one-time items, per-share profit was 14 cents below the 53-cent average of 16 analysts’ estimates compiled by Bloomberg.
Zillow tumbled 9.1 percent to $82.44. The operator of the largest U.S. real-estate information website reported a second-quarter loss on higher costs related to advertising and acquisition-related compensation.
Time Warner added 2.5 percent to $65.65. The owner of the TNT, CNN and HBO cable channels said second-quarter profit topped analysts’ estimates as network advertising sales rose 11 percent, helped by the National Basketball Association playoffs on TNT and the college basketball tournament.
AOL Inc. rose 1.6 percent to $36.77 after it agreed to buy Adap.tv for about $405 million, gaining online video advertising technology used by the world’s largest brands and agencies.
Finisar Corp. (FNSR) surged 16 percent to $22.24. The maker of optical data equipment reported $266 million of revenue in preliminary results for the first fiscal quarter, compared with previous guidance of $245 million to $260 million. Earnings per share were 30 cents to 31 cents, exceeding the forecast range of 22 cents to 26 cents.
To contact the reporters on this story: Tom Stoukas in Athens at [email protected]; Nick Taborek in New York at [email protected]
To contact the editor responsible for this story: Lynn Thomasson [email protected]
