By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell hard on Wednesday as
an Apple Inc. supplier gave a weak forecast, Bank of America Corp.
posted disappointing results and speculation swirled that Germany
could lose its triple-A rating.
"In this environment you don't want to miss, you want to beat
and guide higher," said Phil Orlando, equity strategist at
Federated Investors, citing Intel Corp. and Bank of America's
quarterly earnings reports.
In addition, unsubstantiated talk involving Germany, the euro
zone's largest economy, hammered German stocks, with the U.S.
market following suit.
"Our desk identified some tweet or something that hit at four
this morning that suggested that Germany's government finances were
under review for a possible downgrade," said Orlando.
"We don't know if this is legitimate, but the bottom line is in
the middle of the night our time European markets went into a
tailspin," he said.
After a 195-point slide, the Dow Jones Industrial Average (DJI)
was lately off 161.50 points at 14,595.28, with B. of A. (BAC)
pacing the index's declines that had all but three of its 30
components in the red.
B. of A. shares slid 5.8% after the lender reported
first-quarter earnings below Wall Street's estimates as its
mortgage business weighed.
Caterpillar Inc. (CAT) was down 2.1% after Macquarie downgraded
the construction-equipment maker to neutral from outperform.
The S&P 500 index (SPX) shed 25.49 points to 1,549.08, with
the energy and technology sectors weighing most heavily.
The technology-heavy Nasdaq Composite (RIXF) declined 67.3
points to 3,197.31. Apple fell 5.6% and Cirrus Logic Inc. (CRUS)
plummeted 14% after the chip maker and Apple supplier offered a
weak first-quarter revenue outlook and DigiTimes reported that iPad
mini shipments would fall as much as 30% in the second quarter.
Bank of New York Mellon Corp. (BK) declined 3.2% after reporting
a first-quarter loss and adjusted earnings that missed
estimates.
Fairway Group Holdings Corp. (FWM) rallied 25% in its market
debut, after the New York grocer's initial public offering
reportedly got off to a strong start late Tuesday. Shares of rival
Whole Foods Market Inc. (WFM) fell 2%.
Textron Inc. (TXT) lost almost 13% after the firm forecast a
drop in business-jet deliveries and reported a first-quarter profit
beneath estimates.
Yahoo Inc. (YHOO) edged lower after Bank of America Merrill
Lynch upgraded the Internet company to buy from neutral, a day
after Yahoo forecast second-quarter sales below expectations.
For every stock that rose, nearly five fell on the New York
Stock Exchange, where 312 million shares traded as of 12:05 p.m.
Eastern.
Composite volume exceeded 1.8 billion.
On the New York Mercantile Exchange, oil prices (CLK3) fell
under $87 a barrel after government data had production rising and
demand for gasoline down for a second week.
Gold edged lower (GCM3) to $1,386 an ounce.
On Monday, weak growth numbers from China set off a selloff in
commodities, with benchmark crude for May delivery falling 3% and
gold tallying its largest one-day drop in three decades.
The Financial Times on Wednesday reported a senior auditor in
China had cautioned that escalating local government debt could
bring on a larger financial crisis than the U.S. housing market
crash.
The dollar (DXY) gained against other currencies and Treasury
yields fell, with the benchmark 10-year note (10_YEAR) just below
1.7%.
At 2 p.m. Eastern, the Federal Reserve will release its Beige
Book, which offers an economic analysis of its 12 districts.
The Fed survey will reflect where the central bank thinks the
U.S. economy is right now, that it's "on the cusp of one of these
spring swoons, and is showing signs of what we hope are transitory
signs of softness. They may say they hope growth will firm in the
latter stages of 2013," said Orlando.
"If they say everything is great, I'd be surprised," he
added.
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