U.S. stocks fell, sending the Dow Jones Industrial Average toward its biggest loss since June, amid disappointing results at companies from 3M Co. to DuPont (DD) Co. and as commodities erased their gain for the year.
3M, the maker of products ranging from Scotch tapes to dental braces, and DuPont, the most valuable U.S. chemical maker, slumped at least 3.3 percent. Xerox Corp. (XRX), the provider of printers and business services, sank 7.8 percent after saying third-quarter profit fell 12 percent. Freeport-McMoRan Copper & Gold Inc. (FCX) and Dow Chemical Co. (DOW) slid more than 3.8 percent as commodities retreated amid concern about a global slowdown.
The Standard & Poor’s 500 Index decreased 1.6 percent to 1,410.46 at 10:48 a.m. New York time, the lowest level on a closing basis since Sept. 5. The Dow slumped 235.76 points, or 1.8 percent, to 13,110.13. Trading in S&P 500 companies was 17 percent above the 30-day average at this time of day.
“The earnings season has not gone as well as many would like,” said Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York. “In general, sales have been disappointing. There’s heightened concern about global growth.”
Thirty-three companies in the S&P 500 are releasing results today. Third-quarter sales missed forecasts at 60 percent of companies, according to data compiled by Bloomberg. Earnings at about 70 percent of the index’s companies beat analysts’ estimates, the data showed.
All 10 groups in the S&P 500 retreated today as commodity, health-care and financial shares had the biggest losses. The Morgan Stanley Cyclical Index of companies most-tied to economic growth declined 1.8 percent.
3M (MMM) dropped 3.3 percent to $89.46. The St. Paul, Minnesota- based company, which makes a majority of revenue in Europe and Asia, cut the profit target and the top end of its goal for sales from existing businesses to reflect what it called “current economic realities.” Facing slowing demand, Chief Executive Officer Inge Thulin has raised prices and kept costs in check to boost profit.
DuPont retreated 8.2 percent, the most in the S&P 500, to $45.68. The company said it will eliminate about 1,500 jobs after posting a smaller third-quarter profit than analysts estimated on falling demand for paint pigment.
Xerox fell 7.8 percent to $6.48. The company has said it faces weaker-than-expected demand in Europe amid economic turmoil and competitive pricing. Investors have been looking for increased profitability in services, where the company is making up for declining printing revenue with contracts such as automating payments for governments or processing claims for insurers.
Commodity companies had the biggest losses in the S&P 500 among 10 industry groups. Freeport-McMoRan declined 4.2 percent to $38.86. Dow Chemical dropped 3.8 percent to $28.61.
The Standard & Poor’s GSCI spot gauge of 24 raw materials fell for a third consecutive session, dropping 2 percent today. It first erased gains for the year in May and the last time it happened was in July. The last annual drop was in 2008.
Regions Financial Corp. fell 8.4 percent to $6.49 after the bank said it would move as much as $400 million in loans to non- performing status in the fourth quarter.
Monster Beverage Corp. (MNST) slid 5.6 percent to $43.19. The company was removed from the Conviction Buy list at Goldman Sachs Group Inc. The shares tumbled 14 percent yesterday after its energy drinks have been cited in the deaths of five people in the past year, according to incident reports that doctors and companies submit to the U.S. Food and Drug Administration.
Apple Inc. (AAPL) slid 1.5 percent to $624.81, after surging 4 percent yesterday. The company is taking the wraps off a smaller iPad today, betting that a less expensive version of its tablet computer will help the company fend off competitors including Microsoft Corp., Amazon.com Inc. and Google Inc.
Apple, the most valuable company, will unveil the iPad at an event that starts today at 10 a.m. local time in San Jose, California, people with knowledge of the matter have said. The device will have a 7.85-inch screen diagonally, compared with the 9.7-inch screen of the current iPad, said the people, who asked not to be identified because the computer isn’t public.
Facebook Inc. (FB) rose 1.7 percent to $19.65 ahead of its earnings report. The company is set to post another quarter of slowing revenue growth after struggling to wring money from advertisers seeking to connect with users of mobile devices.
Coach Inc. (COH) surged 4.7 percent to $56.70. The largest U.S. luxury handbag maker reported fiscal first-quarter profit that exceeded analysts’ estimates as it kept expenses for acquisitions and e-commerce from increasing too quickly.
Yahoo! Inc. (YHOO) rose 5 percent to $16.55. New Chief Executive Officer Marissa Mayer outlined her turnaround strategy for the biggest U.S. Web portal, emphasizing mobile technology and personalized services.
United Parcel Service Inc. (UPS), which is considered an economic bellwether, rose 2.7 percent to $73.47. It reduced the top end of its 2012 profit forecast after posting third-quarter earnings that matched analysts’ estimates, buoyed by a gain in U.S. package volumes and international exports.
Federal Reserve Chairman Ben S. Bernanke is trying to inject a little of the exuberance his predecessor Alan Greenspan called “irrational” into markets for everything from stocks to housing. Bernanke, who is seeking to spur the economy with a third round of so-called quantitative easing, has said his stimulus works by lowering borrowing costs and encouraging investors to seek higher-yielding assets.
Boosting home and equity prices through bond buying will encourage consumers and businesses to spend more, according to Bernanke.
Since these are the same assets that plummeted during the financial crisis after reaching record highs, “is there some risk you could start a new bubble and repeat the whole cycle? I suppose there is,” said Robert Shiller, the Yale University professor who forecast the end of the Internet boom in his book, “Irrational Exuberance,” which was published in March 2000, the month the Nasdaq Composite Index peaked before crashing 78 percent.