US Stocks Decline After ECB Disappoints, Summit Spurs Debt Jitters
December 08 2011 - 3:22PM
Dow Jones News
U.S. stocks fell in afternoon trading as investor focus shifted
from disappointment over the European Central Bank to the closely
watched summit on Europe's sovereign-debt crisis.
The Dow Jones Industrial Average lost 171 points, or 1.4%, to
12026 in recent action. The Standard & Poor's 500-stock index
shed 23 points, or 1.8%, to 1238 and the Nasdaq Composite lost 42
points, or 1.6%, to 2607. The losses sent the blue-chip Dow into
negative territory for December even though it has gained for six
of the last eight sessions.
Sentiment turned negative before the session's open, after ECB
President Mario Draghi quashed traders' hopes of more ECB bond
buying. In addition, the central bank gave no new plans to bail out
debt-laden governments. As expected, the ECB cut its key lending
rate to 1% from 1.25%, but the new efforts stopped well short of
committing to buy more government bonds.
The ECB news put traders on edge just ahead of the Brussels
summit, which kicked off with a working dinner and was set to
continue through Friday. The summit has been the focus of traders'
hopes for aggressive new plans to fight the sovereign-debt
crisis.
"We aren't expecting a masterstroke of an agreement," said John
Toohey, vice president at USAA Investment Management Co. "[But] if
they don't take any steps at all, it will be a big negative."
Financial stocks posted the steepest losses. J.P. Morgan Chase
lost 4.5% and Bank of America shed 4.4% to lead the Dow's
decliners. Morgan Stanley and Citigroup were two of the S&P
500's biggest decliners, each sliding more than 7%.
In U.S. economic data, the number of U.S. workers filing new
applications for unemployment benefits fell to the lowest level in
nine months, which helped limit the session's losses. Wholesale
inventories for October rose 1.6% as companies stocked up in
anticipation of strong holiday sales.
European markets also declined. The Stoxx Europe 600 finished
with a 1.5% loss and Germany's DAX shed 2%. Asian bourses fell,
with Japan's Nikkei Stock Average losing 0.7%.
"The expectations are ahead of the reality," said Jim Russell,
regional investment manager for U.S. Bank Wealth Management. "We
have seen the markets buy into optimistic statements on the
resolution of this crisis, only to be disappointed."
Gold futures settled down 1.8% at $1,709.80 a troy ounce. The
dollar gained versus the euro and the Japanese yen.
McDonald's was the strongest blue-chip stock and one of two Dow
advancers, gaining 0.8%. The fast-food company's global same-store
sales jumped a greater-than-expected 7.4% in November thanks to
expanding premium and mid-tier products in Europe and adding
Peppermint Mocha to the McCafe line-up in the U.S.
Costco Wholesale shed 1.6% after the wholesale club reported
fiscal first-quarter earnings grew just 2.6% despite a
double-digit-percentage increase in sales because of rising
costs.
Affymax soared 39% after its dialysis treatment received a
favorable vote from the Food and Drug Administration.
Ciena climbed 2.9% after the network gear maker's fourth-quarter
loss narrowed amid a big jump in revenue in high-margin
packet-optical switching.
MEMC Electronic Materials gained 2% after the company said it
would cut 20% of its work force and reduce manufacturing capacity
as part of a restructuring that will result in a fourth-quarter
charge of nearly $700 million.
Pacific Sunwear gained 14% after the company said it planned to
close up to 200 stores in the coming 14 months and hopes to seek
aid from a private-equity firm experienced with ailing
retailers.
Apparel maker G-III surged 18% after unveiling a deal with PVH's
Calvin Klein to open women's sports apparel stores in the U.S. and
China, overshadowing a lower-than-expected 2% gain in quarterly
profits and lower full-year earnings projection.
THQ slumped 34% after the videogame publisher cut its fiscal
third-quarter revenue outlook 25% and cut its full-year earnings
view.
-By Brendan Conway, Dow Jones Newswires; (212) 416-2670;
brendan.conway@dowjones.com
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