U.S. stocks fell more than 32 months this week, erasing the Standard & Poors 500, 2011 advance, as investors fled stocks amid signs that the economy is stagnating. An early rally faded yesterday as concern grew that S & P may cut American's credit rating, speculation, which proved true after financial markets closed.
Bank of America Corp. (BAC) and Alcoa Inc. plummeted more than 13 percent, losses in the Dow Jones Industrial Average. Caterpillar Inc. (CAT) dropped 7.9 percent, while General Electric Co. (GE) sank 7.8 percent. Energy companies and materials in the S & P 500 fell 9.5 percent or more, mostly among 10 industries, as each group refused. The losses exceeded 10 percent for 167 out of 500 companies in the index, and rose nine.
The S & P 500 fell 7.2 percent to 1199.38, the biggest weekly drop since November 2008 and the lowest level since November 30, 2010. The Dow rose 60.93 points yesterday. For the week, fell 698.63 points, or 5. 8 percent, to 11,444.61. The action cleared the year to date earnings reached 8.4 percent and 11 percent to 29 April, respectively.
"It was a disaster," said Michael Gibbs, Memphis, Tennessee-based equity strategist at Morgan Keegan Inc., yesterday in a telephone interview. His company controls about $ 80 billion in client assets. "The weakness of the U.S. economy coupled with a lack of confidence in Europe's leadership made the perfect storm for investors."
About $ 1870 billion has been wiped off the value of U.S. equities since July 22, including the fall of 4.8 percent for the S & P 500 on August 4 that was the biggest drop since February 2009.
For safety
Investors speculated that the global economy may contract, leading out of stocks and the euro and in shelters such as Treasury bonds. The European Central Bank President Jean-Claude Trichet, sought to quell concern among investors that the 21-month crisis spread to Italy and Spain, the economies of third and fourth largest in the region. The shares have dropped two consecutive weeks as reports on manufacturing and consumer spending showed the world's largest economy is slowing. The S & P 500 fell 0.1 percent yesterday, even after the U.S. the Commerce Department said employers added that 117,000 jobs last month, exceeding the median forecast of 85,000 economists in a Bloomberg survey. The S & P 500 has fallen 11 percent since July 22, the biggest loss in the same amount of time since March 2009 when the equity bull market began.
The S & P 500 rose to 1. 5 percent in the first five minutes of the day yesterday before returning less than speculation swirled through the market that S & P was preparing to strip the U.S. its AAA rating for the first time. S & P lowered the rating one level to AA + after financial markets closed on August 5, criticizing the country's political process and said lawmakers do not cut spe
Cyclical Slump
The Morgan Stanley cyclical index of companies linked to economic growth slumped 11 percent this week as all 30 of its shares are retired. The Dow Jones Transportation average of 20 actions, is also considered an indicator of the economy, fell 9.5 percent. Both indexes fell most since March 2009.
United Technologies Corp. (UTX), maker of aircraft engines Pratt & Whitney, retreated the most since October 2008, losing 11 percent to $ 74.14. Boeing Co. (BA), the second largest commercial aircraft maker, fell 11 percent to $ 62.75. Caterpillar, the world's largest construction and mining equipment maker, fell 7.9 percent to $ 90.99.
While the growing concern U.S. growth is slowing has driven down stocks, Wall Street has never been so sure that the S & P 500 (SPX) will join in 2011. Chief strategist at Barclays Plc 13 banks for UBS AG see as a reference for American equity increased 17 percent through diciembre31, the average estimate in a Bloomberg survey. Its projection for 1401 reac
