U.S. stocks slid for a sixth day Thursday as concern spread that weaker global economic growth and the European debt crisis will hurt U.S. corporate earnings. The Dow Jones industrial average and Standard & Poor’s 500 index had their longest
U.S. stocks slid for a sixth day Thursday as concern spread that weaker global economic growth and the European debt crisis will hurt U.S. corporate earnings. The Dow Jones industrial average and Standard & Poor’s 500 index had their longest losing streaks since mid-May.
Billionaire investment guru Warren Buffett set a gloomy tone before the market opened, telling CNBC weak demand is hurting his retail, jewelry, carpet and other businesses. He said business in Europe has dropped off quickly in the past two months.
Other companies appear to be struggling as well. Aluminum maker Alcoa, which kicked off the second-quarter earnings season on Monday, reported very weak revenue because of the faltering global economy. Fastenal, a U.S. industrial distributor, reported revenue Thursday that was weaker than analysts were expecting.
Hotel operator Marriott and Progressive, an insurance company, both plunged after reporting weak financial results.
Traders also sweated about Europe’s debt crisis and new Chinese economic data due out today.
The Dow fell as much as 112 points in early trading. It recovered to turn briefly positive in the afternoon before closing with a loss of 31.26 points, or 0.3 percent, at 12,573.27. Dow component 3M fell $1.44, or 2 percent, to $86.41. Demand for the manufacturing conglomerate’s products would weaken if the global economy faltered.
The S&P 500 fell 6.69 points, or 0.5 percent, to 1,334.76. The Nasdaq composite index fell 21.79, or 0.8 percent, to 2,866.19.
Supermarket operator Supervalu plunged by nearly half after the company reported a sharp drop in net income late Tuesday and suspended its dividend. Supervalu, which owns Albertsons, Jewel-Osco and Save-A-Lot, lost $2.60 to close at $2.69.
Supervalu’s losses dragged on rival grocery chain Safeway, which fell $2.25, or 13 percent, to $15.73. Safeway’s was the biggest percentage decline in the S&P 500 index.
The weak corporate results will likely prompt analysts to lower their quarterly earnings forecasts for the entire S&P 500, said John Fox, co-manager of the FAM Value Fund, which specializes in small and medium-sized companies.
“There will be more disappointments than surprises,” Fox said. “It’s a global world, and many of the small companies we invest in do business all over the world,” he said, adding his firm already is using estimates below Wall Street’s consensus.
Fox said Buffett sounded far more negative than he has over the past year. At Berkshire’s last annual meeting, which Fox attended, Buffett declared all but a handful of the conglomerate’s companies were doing better.
“The tone of his comments has definitely changed, which I think is a fair reflection of the environment,” Fox said.
