U.S. Stocks Extend Slide on Growth Worries
07/12/2012| 04:33pm US/Eastern
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--DJIA, S&P lose ground for sixth session in a row
--Europe, Asia decline after central banker inaction disappoints
--Investors shrug off better-than-expected U.S. jobless-claims data
By Matt Jarzemsky and Chris Dieterich
NEW YORK--The S&P 500 sank, extending the longest slump for the broader market in nearly two months as investors weighed concerns about corporate earnings and a global economic slowdown.
The Standard & Poor's 500-stock index dropped 6.69 points, or 0.5%, to 1334.76. Technology and financial shares led declines, while defensive sectors such as healthcare and utilities rose.
The Dow Jones Industrial Average fell 31.26 points, or 0.25%, to 12573.27, recovering from a late-morning drop of as much as 112 points Thursday. The Nasdaq Composite shed 21.79 points, or 0.75%, to 2866.19.
A bright spot among Dow industrials was Merck, which jumped 4.1% after saying results from a late-stage study of an osteoporosis treatment were positive enough for an early end to the trial. Procter & Gamble added 3.8% after a report that activist investor Bill Ackman has taken a large stake in the company.
"It still seems to be a 'sit on your hands and wait' kind of market. We're still waiting for more details out of Europe, and the next big thing is for second-quarter earnings to really kick in," said Bill Stone, chief investment strategist for PNC Wealth Management in Philadelphia, which oversees $112 billion.
In corporate earnings news, Supervalu plunged 49% after suspending its dividend and withdrawing financial projections for the year to account for pricing pressure. It reported worse-than-expected quarterly results and said it's considering selling all or part of itself amid a heavy debt load and fierce competition in its industry.
Pessimism around Supervalu's results contributed to a slide in fellow grocery-store operator Safeway, which led the S&P 500 lower by falling 12%.
Marriott International dropped 6.4% after warning of weakening expansion overseas.
"We're coming into the critical summer period where you're starting to have a read on what's going to happen the rest of the year," said Joe Costigan, director of equity research at Bryn Mawr Trust, which manages $6 billion. "Folks are concerned that they're going to get on an earnings call and the management team is going to turn around on their earlier guidance."
The trading session followed a selloff in overseas stock markets after central bankers in the U.S. and Japan didn't satisfy investors' hopes for stimulus. Investors also were focused on Chinese second-quarter gross domestic product data due late Thursday that was expected to show a further slowdown in the growth of the world's second-largest economy.
In Europe, the Stoxx Europe 600 shed 1.1%, despite an unexpected increase in May industrial production in the euro zone. Japan's Nikkei Stock Average lost 1.5% and Hong Kong's Hang Seng fell 2%. The euro fell versus the dollar.
"The narrative the last couple of months has been the rest of the world is sinking, but the U.S. is relatively insulated," said Barry Knapp, the New York-based head of U.S. equity strategy at Barclays. It's finally coming home to roost that the U.S. has weakened a lot."
"This earnings season and some of the pre-announcements this week have really brought that into focus," Mr. Knapp added, referring to companies such as Advanced Micro Devices and Applied Materials warning of lower financial projections.
Investors shrugged off a Labor Department report that the number of U.S. workers filing for jobless benefits fell more than economists expected to the lowest level in more than four years last week. The drop could offer hope that the labor market might be slowly improving. Economists cautioned the reading was likely skewed by government adjustments to compensate for seasonal shutdowns at auto plants.
In other corporate news, ImmunoGen slid 7.8% after the developer of anticancer therapies announced plans for a public offering of common stock.
Housing stocks advanced, with the PHLX Housing Sector index gaining 2.1% and Lennar advancing 3.6%, among the biggest gains by S&P 500 components.
Crude oil futures rose 0.3% to $86.08 a barrel. Gold futures lost 0.7% to settle at $1,564.90 a troy ounce. The dollar slumped against the yen.
Write to Chris Dieterich at christopher.dieterich@dowjones.com
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