Weak forecast on Asian economy sends stocks lower
10/8/2012U.S. stocks fell today as investors looked forward without excitement to third-quarter earnings reports and the World Bank said Asia's economies won't grow as much as expected this year.
U.S. companies are expected to report a profit decline when the earnings season starts on Tuesday. FactSet says companies in the Standard & Poor's 500 index are expected to post an overall profit decline for the first time in 11 quarters.
In late morning trading, the Dow Jones industrial average was down 46 points at 13,563. The Standard & Poor's 500 index fell six points to 1,455 and the Nasdaq composite gave up 27 points to 3,108.
European markets were also lower. The CAC-40 in France fell 1.4 percent, the FTSE 100 in Britain was down 0.5 percent, and the German DAX was down 1.4 percent.
The World Bank warned that a “more pronounced slowdown” is possible in China, the world's second largest economy. It also cut its overall growth forecast for developing countries in Asia.
Slower growth in Asia could drag down the U.S. economy. One of the few bright points for the U.S. during the recession was tremendous growth in export demand by developing nations in Asia and other regions.
Even though the U.S. economy isn't doing badly, investors have been counting on growth in Asia for help, said Rex Macey, chief investment officer at Wilmington Trust Investment Advisors. “There was a point where we said ‘Thank goodness for Asia and China. Their growth can fuel the recovery.” That not so clear anymore, he said.
Wal-Mart Stores and American Express shares didn't move much after they announced a reloadable prepaid card with no recurring or overdraft fees. But the news hammered shares of prepaid card competitor Green Dot Corp., which has also offered a card with Wal-Mart. Green Dot fell $2.50, or 19.5 percent, to $10.35.
UnitedHealth Group rose 36 cents to $57.49 after the health insurer said it would pay $4.9 billion in cash to buy most of Brazilian health benefits and hospital services provider Amil Participacoes.
U.S. government bond trading was closed for the Columbus Day holiday.